I recently sat down with Mercer principal and retirement expert Malcolm Hamilton to talk about financial independence and how it relates to retirement. Below is the third audio clip from the interview.
While not everyone has an employer pension plan or maximizes contributions to RRSPs or TFSAs, every working Canadian must contribute to the Canada Pension Plan or CPP (or in Quebec, the QPP). In the case of salaried employees, CPP contributions are deducted from paycheques “at source” just like taxes.
Of course, not everyone earns enough to generate maximum CPP benefits in retirement. For those in this situation, it may not make sense to take early reduced benefits as early as 60. Some may even wish to defer receipt of CPP past the traditional retirement age of 65, since benefits will increase each year you defer receipt until age 70.
Q: When should you tap the CPP?
A: Press play to hear Hamilton’s response: