Over 65 and Still Working? Are You Needlessly Paying CPP Contributions

  • Home
  • Blog Articles
  • Over 65 and Still Working? Are You Needlessly Paying CPP Contributions
Retirement Income Planning, Calgary

What will happen if you have made the maximum CPP contributions are still working and decide to delay taking your CPP past age 65?

Your CPP benefit is based on how much you contributed to the plan for the 47 years between the ages of 18 - 65. The rules allow you to drop off 17% of your lowest earning years (8 years) and calculate your CPP based on your best 39 years of contributions. If you take CPP at age 60 then your benefit will be based on your best 35 years (42 years minus 17%).

When you get your Statement of Contributions from Service Canada you can see how much you contributed to CPP since you were 18 years old. The far-right column will have a "0" if you didn't earn enough that year to make a contribution. It will have a "B" if you earned below the maximum and it will have an "M" if you earn the maximum. Very few Canadians qualify for the maximum CPP (In 2020 the maximum benefit would be $1175.83/month).

Let's say Fred has 39 years of maximum contributions and he is age 65 and still working. If Fred delays taking CPP will he get more? The short answer is yes. For each month that Fred delays taking his CPP past age 65, his benefit will increase by .7% per month. You should only delay to age 70; after that, there is no bonus for delaying. At 70 years old, with 39 years of maximum contributions, deciding to take CPP at age 70 in 2020, Fred would receive $1669.68 per month. (42% more than what he would have got at age 65).

Here's the bad news.

If an individual already has 39 years of maximum contributions at age 65 and they do not opt to take their CPP at age 65 and are still working, they are also required to keep making contributions up to age 70. Those contributions will not add a single cent to their benefit. If they were earning at least $58,700 they would be paying in $2898 in CPP contributions, as would their employer, but with no additional benefit. (In 2021 that contribution rate will increase to $3166.45) A self-employed person will be paying both employer and employee parts ($6332.90).

Now let's muddy the water a bit more. Let's imagine another individual. Let's call him Bill and Bill decides to take his CPP at age 65 and he has 39 years of maximum contributions so he gets the maximum of $1175.83 per month. But, Bill is still working from the age of 65 to 70 and he opts to keep contributing to CPP. Bill will receive what is called Post Retirement Benefits.
Read more about these PBR's. So, let's just say that Bill earns more than $58,700, which is the YMPE (Yearly Maximum Pensionable Earnings) each year from age 65-70. Here's what his CPP cheque will look like.

Age 65: $1175.83/month 
Age 66: $1207.70/month 
Age 67: $1242.04/month 
Age 68: $1278.84/month 
Age 69: $1318.12/month 
Age 70: $1359.87/month 

Total Received by age 70: $90,988.80

It will take until age 93 for Fred and Bill to have received the same benefit from their CPP. (approx. $460,000) The difference is, Bill had his money at a much younger age to enjoy. Statistically, only one of them has a 50% chance of reaching age 94.

Click Here to book an appointment or learn more about our fee-only planning services.


Retirement Income & Investment Planners,

Willis & Nancy Langford


Share This Post:

Related Posts

Latest Testimonial

I contacted Langford Financial to see if they could help me with specific questions on retirement & estate planning, efficient tax strategies, CPP and OAS benefits, and income drawdown strategies. I was very nervous at first about whether they would be a good fit for my needs, but my concerns were quickly put to rest and Willis and his team made me feel at ease right from the very first meeting.

They are very easy to work with, are very knowledgeable and resourceful, are able to break down complex matters into an easy-to-understand manner, and are always quick to respond to any questions. They reviewed my situation and were able to tailor a plan to fit my specific needs, to my complete satisfaction.

The plan included amongst other things, the best way to utilize efficient income tax strategies. helped me to understand the correct drawdown of assets which would result in larger savings, and provided guidance on insurance products and efficient estate planning.

As a result, I have a much clearer picture of my financial situation now and feel very confident and satisfied with the plan that they have proposed for me, going forward. What I appreciated the most about Willis and his team was that, in addition to their friendly, personable and professional approach, at no time was there ever any pressure to purchase any products.

I am very happy with the service I received from Willis and his team and would recommend Langford Financial to anyone looking for advice on their retirement planning needs. You will not be disappointed!

Naila Jinnah

Naila Jinnah
Fee-Only Planning Client

Contact Us

Questions? Comments? Call us today at 587-755-0159 or fill out the form below:

Have Questions? Call Us Today At

Call Us

Join Our Newsletter