Canada Pension Plan benefits can be taken any time between 60 and 70. The standard age is 65, and the adjustment factors are significant: taking CPP early (before 65) reduces your benefit by 0.6% per month, while delaying past 65 increases it by 0.7% per month.
That means someone deferring from 65 to 70 gains 42% more annual CPP (0.7% × 60 months). Someone taking it at 60 instead of 65 loses 36%.
When deferral wins
Deferring CPP tends to pay off when:
- You expect to live past the break-even age (typically the early-to-mid 80s).
- You have other income sources to bridge the gap years (60–70), such as RRSP drawdowns, a pension, or non-registered funds.
- Your other income would otherwise push you into OAS clawback territory — replacing taxable RRSP withdrawals with tax-preferred CPP later can help.
When taking it early makes sense
- You have a shorter life expectancy or health concerns.
- You need the cash flow and lack other bridge sources.
- You'll be in a lower tax bracket in your 60s than later (less common once pensions and RRIF minimums kick in).
How the tool models it
The Retirement Income Sequencer applies the 0.6%/0.7% monthly factors automatically based on your chosen CPP start age, then sequences CPP alongside your other sources. Try setting CPP start age to 60 vs. 70 and watch the lifetime tax and net income shift in the yearly breakdown.
Bottom line: deferral is a longevity hedge and a tax-smoothing lever, not a one-size-fits-all win. Run your numbers.