The Canada Revenue Agency (CRA) manages the Canada Pension Plan (CPP), which provides Canadians with a steady stream of retirement income. While most benefits like Old Age Security (OAS) and Guaranteed Income Supplement (GIS) begin at age 65, CPP benefits are more flexible. You can start receiving your CPP payout as early as age 60, or delay until 70.
This leads to a critical decision for many Canadians: should you take CPP at 60, or wait until 65 (or later) for a higher monthly benefit?
$40,000 Disability Tax Credit in Canada 2025: Step-by-Step Guide to Claiming
$7,500 Home Renovation Tax Credit in Canada: Big Savings for Canadians in 2025
CRA Announces Extra $575 GST/HST Credit in August 2025: What You Need to Know
Misconceptions About CPP Benefits
Many believe CPP can only be claimed after retirement, but that’s not true. You don’t need to stop working to collect CPP. If you continue working after age 60, you must still contribute to CPP until 65. Those contributions will increase your post-retirement benefits.
After age 65, you can choose whether to continue contributing or not, depending on your financial needs and retirement plans.
When Claiming CPP at Age 60 Makes Sense
1. Unemployment or Financial Need
If you lose your job or face financial stress, claiming CPP at 60 provides an immediate income source. The CRA calculates your CPP payout based on your best 39 years of pensionable earnings, so if your income history already includes low-earning years, starting earlier may not reduce your benefit as much as you fear.
2. Business Owners With Dividend Income
CPP contributions are deducted only from salary and business income, not dividends. If you are a small business owner who primarily paid yourself through dividends, your CPP contributions may be low. In this case, waiting until age 70 won’t significantly boost your payout. Claiming CPP at age 60 might make more sense depending on your tax situation.
3. Single or Lower Life Expectancy
CPP payments continue until your last breath. If you are single and do not have a spouse to receive survivor benefits, or if you have health concerns that lower life expectancy, taking CPP at 60 allows you to maximize the total benefit you receive over your lifetime.
CPP at Age 60 vs. CPP at 65: What’s the Difference?
- If you claim CPP at 60, your payments are permanently reduced by 0.6% per month (a 36% reduction if you start five years early).
- If you wait until age 65, you receive the standard CPP benefit based on your contributions.
- Delaying past 65 increases your payments by 0.7% per month, up to age 70.
For example, if your standard CPP payout at 65 is $1,000 per month, claiming at 60 reduces it to $640, while waiting until 70 boosts it to $1,420.
Tax Considerations When Taking CPP Early
All CPP benefits are taxable income. If you start CPP at 60 while still working, your overall income may push you into a higher tax bracket. On the other hand, if you are unemployed or have low income, claiming CPP early may result in lower taxes and better cash flow.
Key Takeaway
The decision to take CPP at age 60 depends on your employment status, income type, health, marital status, and tax situation. While waiting until 65 (or even 70) ensures a higher monthly payout, many Canadians benefit from accessing their CPP earlier.
Always evaluate your CPP eligibility, expected retirement income, and long-term financial goals before making the choice. Consulting a financial planner may also help maximize your CPP benefits while balancing OAS, GIS, and other retirement income sources.