I met with my client, Mark, who recently turned 60. He sat down on the leather chair in the cafe, grinned at me, and took a big sip of his coffee. And then he said something we’d planned for years, and asked a question I’m often asked.
“Adrian, I just turned 60, and I’m seriously thinking about winding down my practice. I’ve been talking with other doctors, and I wanted to know your thoughts on if I should I start taking my CPP now, or should I wait?”
I’ve known Mark for years. We’d reached his financial independence some time ago, and he now felt the timing was right to start thinking more seriously about what lay ahead.
But I knew he was looking for a quick, binary answer. A simple “Option A” or “Option B” he could check off his list.
But if YOU’VE ever worked with me for more than five minutes, you already know my default answer to almost every big financial decision.
“Well, Mark, it depends.” And then I grinned back at him!
Pulling CPP Is Connected To Your Whole Financial Plan
My response wasn’t a dodge; it’s just the reality of how retirement income planning actually works.
Pulling the lever on your CPP isn’t just about what’s THE age that maximizes your benefits, it’s about how that single decision connects across your financial life.
Let’s look at the 3 main CPP paths:
1.Taking it early at age 60:
You take a permanent 36% haircut on your monthly benefit amount. That sounds painful, but it might be the absolute right move if you have pressing health considerations or a shortened life expectancy. Getting guaranteed cash flow into your hands earlier lets you enjoy those “go-go” years and taking less from your investments if they’re doing particularly well so they can continue to grow.
2. Waiting until age 65 (even if you retire early):
We often delay CPP past your practice retirement date so we can strategically draw down your other retirement buckets first. (I talk about this extensively in my book, Retire-ish) In particular your RIF. Why? Because taking out more from your RIF than you need to before you start to collect Old Age Security (OAS) can lower your mandatory minimum withdrawals later on to help avoid a potential claw back of your OAS benefits if your income is pushed too high otherwise. (And it doesn’t help that dividends from your Prof Corp are grossed up by 15 or 38% ahead of when your OAS claw back limit is calculated….ouch!)
3. Holding out until age 70:
Delaying to age 70 gives you a massive 42% permanent bump in your monthly CPP benefit. Numerically, if you have a normal or longer life expectancy, waiting until 70 wins out in total dollars collected over your lifetime. It acts as a guaranteed, inflation-indexed safety net that you can never outlive.
Pulling the lever on your CPP isn’t just about what’s THE age that maximizes your benefits, it’s about how that single decision connects across your financial life.
Mapping Your Financial World
Deciding which path to take isn’t just about math; it’s about how the money interacts with your accounts and how those accounts are taxed when withdrawn.
If you’re one of my clients, you’ve almost certainly heard me say I like to have multiple chess pieces on your financial board so we have the most options to consider how to create your income.
We balance 4 key considerations yearly in your retirement:
1. Your Health: Your personal health and family history dictate your horizon.
2. Interest Rates: Prevailing rates impact how your fixed-income and guaranteed assets perform relative to pension indexing.
3. Tax Rates at Retirement: 15 years ago, our highest marginal tax rate in Alberta was 39%, and ineligible dividends sat just below 28%. Now? An eye-popping 48% on income, and just about 43% on those dividends. People that had saved in an RSP or their Prof Corp just had the goal-posts moved as it became much more expensive to get those funds out!
4. Market Conditions: Are the markets up, down, or sideways this year? This might dictate which assets we pull from, what to leave alone, and maybe even which ones we add to!
Deciding when to take CPP is really about figuring out how to optimize those four pillars so you can step into your next chapter with clarity and confidence, and I cover these and more in my book “Retire-ish”!
When the right planning is done, the answer to CPP is simple (but never easy). Having a proper, personalized plan that accounts for your unique circumstances is the only real way to know when to start YOUR benefits.
As for Mark? He opted to wait until he is 65 and we’ll revisit his CPP plan then.
But in the meantime? We got his retirement plan rolling full swing based on the 5 Bucket Financial Buckets we’ve set up.
He’s one happy 60-year-old!
I’d love to hear from you! I’m always interested in hearing about the unique financial situations doctors have. Send me a note! And if you’d like to learn about my unusual 5 Bucket Formula? Please check out my newest Amazon bestselling book, Retire-ish: What Doctors Need To Know Before They (Sort Of) Retire
