Why Canada’s former chief accountant says you should wait to receive CPP benefits

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This is the latest article in an ongoing series. CPP planamong them Globe Advisor examines the decisions behind when to receive CPP benefits and considers various aspects of the beloved and often debated government-backed pension system.

Jean-Claude Ménard served as Canada’s Chief Actuary from 1999 to 2019, where he was responsible for preparing actuarial reports for programs such as the Canada Pension Plan (CPP) and Old Age Security (OAS) plans. Menard recently spoke to Globe Advisor about why he believes Canadians should wait to receive CPP or Quebec Pension Plan (QPP) benefits, including his decision last year to start receiving QPP benefits at age 67. he said.

Calculate when to start collecting CPP – before age 65

Why would you want more Canadians to wait to receive CPP or QPP benefits?

I don’t want people to outlive their retirement savings. What is the point of creating a CPP and making it financially sustainable? [with the establishment of CPP Investments in the late 1990s] – What if it doesn’t help people? That’s the main reason. Additionally, longevity rates are increasing with the passage of time. Thanks to incredible advances in fighting disease, mortality rates in the 1960s were very different than they are today. I don’t think many people realize how much progress has been made and how much progress will continue to be made. This will further extend its lifespan.

Why do you think so many people decided to take it sooner?

I believe there are four main reasons. First, many people underestimate their life expectancy. Recent research shows that people underestimate their life expectancy by about five years. The second is a lack of confidence in the future. Since the future is unknown, some people want to get money quickly, even if it is a small amount. However, uncertainty could also be a reason to wait to get his CPP and receive more money later. The third reason is that once people reach a certain age, such as 80, they think they are too old to enjoy life. They would rather spend money on leisure activities such as travel in the short term than spend it on care in later life. I’m older. They believe that the government will take care of them until they die and that they don’t need retirement benefits after a certain age. The fourth reason is that many people know a relative or friend who passed away at a young age, such as someone in their 60s, and think that’s why they should receive the money sooner.

Why did I receive CPP at age 67?

My decision was influenced by the age at which my parents died. His father passed away at age 78 and was a heavy smoker until he underwent triple bypass surgery at age 50. Her mother died at the age of 85. Her grandmother lived to be 104 years old. I needed to decide what age was best for me. Although I have never smoked, genetics are still an important factor to consider. I will live to be in my mid-80s, maybe 85, 88, or 89. Starting this year, Quebec allows you to do so, although there will be a slight penalty if you take it at age 67 instead of 70 or 72.

What do you tell your family and friends about the timing of CPP?

I tried to convince some of them to defer receiving CPP/QPP benefits, but without much success. After a while, I realized that waiting 5+ years for someone is too long. So I’m now encouraging people to consider waiting an additional year. Then, once the year is over, you have to ask yourself, “Do I need it now, or can I wait another year?” Thinking this way has convinced some people to push for at least a few years. We don’t know what will happen in the future. Fair point. But most people have a pretty good idea of ​​what’s going to happen over the next 12 months. So, if you are in good health, wait a year. Because as most people know, the longer you wait, the higher your monthly payments will be. I love it when I can convince someone to wait at least a year and it’s in their interest.

This interview has been edited and condensed.

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