Early or Late Retirement

Q.1. How does retiring early affect my pension?

Retiring early will reduce the amount of pension you will receive and there are some conditions that you may need to meet. It means that you have paid into the plan for fewer years and you are likely to draw that pension longer. As a result, your monthly pension will be reduced. You should consult your plan to see how that difference would be calculated. An example of an individual who chooses to retire at 55 shows the impact on pension payments.

Remember, the earliest you can collect Old Age Security is age 65, and the earliest you can receive payments from your Canada Pension Plan is at age 60 with a reduction. You can defer receiving your Old Age Security (OAS) pension for up to 60 months (5 years) after the date you become eligible for an OAS pension in exchange for a higher monthly amount. If you delay receiving your OAS pension, your monthly pension payment will be increased by 0.6% for every month you delay receiving it, up to a maximum of 36% at age 70.You can delay receiving your CPP up to age 70, which will increase your monthly payments. However, there are no increases in benefits if you wait past the age of 70.

Q.2. How does retiring late affect my pension?

Notwithstanding the conditions noted above, retiring late will also affect your pension and increase the amount you receive monthly. You will continue to contribute to your plan and your employer may also continue to contribute. An example of the difference shows the impact.