How to Double Your Canada Pension Plan (CPP) Income

A new series of research papers from the National Institute on Ageing (NIA) has renewed interest in delaying Canada Pension Plan (CPP) benefits until the latest permitted age — 70. The NIA’s work highlights how waiting can substantially increase monthly CPP payouts and improve financial security in retirement.

When the NIA released an introductory overview on April 11, it showed that delaying CPP to age 70 can more than double the monthly benefit compared with beginning at the earliest age of 60: roughly 2.2 times higher. Old Age Security (OAS) shows a similar pattern, although less dramatic because its earliest start age is 65. The NIA’s research and forthcoming papers explore the mechanics and trade-offs of delaying CPP and how that strategy serves both as protection against long-term inflation and as a form of longevity insurance — guarding retirees against the risk of outliving their savings.

What the research says about delaying CPP

The NIA plans to release additional papers through the year, covering broad education about Canada’s retirement income system and detailed explanations of how CPP and the Quebec Pension Plan (QPP) adjust for early versus delayed claiming. Bonnie-Jeanne MacDonald, PhD, FCIA, FSA, director of financial security research at the NIA (Toronto Metropolitan University), leads the research, with support from several contributors.

Many readers were surprised by the precise 2.2x figure when it was publicized, which reflects a broader lack of awareness: a 2018 Government of Canada poll cited by the NIA found that about two-thirds of Canadians didn’t realize their CPP benefit increases the longer they wait to claim. That partly explains why most retirees claim CPP well before age 70.

York University finance professor Moshe Milevsky observes that choosing to start benefits early is human nature rather than purely irrational behavior. People often prefer the immediate, smaller benefit over the potential for larger future payouts, partly because future taxes and policy changes remain uncertain. Milevsky, a long-time advocate of annuities and longevity insurance, argues delaying CPP is effectively the best personal annuity strategy many people can adopt.

Not everyone’s convinced to wait on CPP

Not all experts agree that deferral is right for everyone. Malcolm Hamilton, a retirement specialist formerly with Mercer, cautions that the 2.2x headline can be misleading. While the age-70 payment is technically more than double the age-60 payment, that doesn’t mean it’s twice as valuable overall: receiving a larger annual payment over fewer years may not produce a proportionate lifetime gain. For someone who claims at 70 but dies at 80, they would receive ten fewer years of payments compared with someone who began at 60.

Hamilton notes the adjustment factors used by Ottawa’s chief actuary are intended to be financially neutral for CPP. He says deferral is often advantageous, but primarily for people who can afford to wait and who are in good health with typical life expectancy. The NIA’s own survey indicates many Canadians depend on CPP for current income, and for those individuals deferring is not a viable option.

MacDonald responds that the adjustment factors are not strictly cost neutral and emphasizes that deferral is a powerful tool for those seeking greater financial security — the top financial priority among older Canadians in their survey. She also points out many retirees could self-fund the deferral period by drawing on registered retirement savings (for example, RRSPs) between 65 and 70, preserving lifestyle while increasing future guaranteed income.

The risk of longevity on lifelong income

MacDonald and other writers stress that without enough guaranteed lifelong income, retirees face the twin risks of inflation and outliving their savings. Fred Vettese, a pension and annuity expert, has long recommended delaying CPP to 70. He argues the odds favour those who wait: the chance of being better off by deferring generally outweighs the risk of being worse off. Vettese notes CPP benefits are linked to wage growth before payment begins and indexed to price inflation after payment starts, which affects the relative value of deferral.

Senior financial planner Matthew Ardrey also supports deferral when feasible. He recalls a time when the conventional wisdom favoured taking CPP early, but improvements in deferral credits and greater penalties for early claiming have shifted that consensus. Ardrey warns many people still mistakenly consider claiming at 60 the correct choice despite changes that make waiting more attractive for most Canadians.

Every retiree is different, so are their retirement income needs

There are valid reasons to claim early: impaired life expectancy, immediate cash flow needs, or lack of other financial resources. But for most Canadians, experts say claiming at 60 is likely the wrong financial decision. The breakeven age for waiting from 60 to 65 typically falls between 73 and 74; delaying to 70 pushes the breakeven age to roughly 81. Average life expectancy for a 60‑year‑old remains above those breakeven points for many people, which means significant lifetime CPP can be forfeited by claiming early.

To illustrate current 2024 figures: the maximum CPP benefit is $16,375. That maximum reduces to about $10,480 if taken at 60 and increases to approximately $23,253 at 70 — making the age-70 payment roughly 2.22 times the age-60 payment. For many retirees, deferring can translate into meaningful additional income over the long term; by age 85, the cumulative difference can be substantial.

As longevity rises, financial plans increasingly extend into the mid-90s, which heightens the importance of reliable, inflation-indexed income streams. CPP functions like an indexed defined-benefit pension: it provides a stable, inflation-protected income that many retirees value highly and that would be costly to replicate through private savings alone.

More from Jonathan Chevreau:

• Retirement income for life
• Switching from RRSP to RRIF
• How to plan for retirement
• The value of government benefits