- April 11, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Planning for Early Retirement: Nailing Down CPP Estimates
I am currently in the process of getting all my ducks in a row for early retirement, and one variable that I am struggling to nail down is my CPP estimate. I recently reached out to Services Canada to obtain a revised estimate, as I am planning on leaving the workforce at the age of 55. Unfortunately, I did not have any success with this endeavor as the numbers they provided were actually higher than the online estimate that I could view by logging in. It seems that the numbers they gave me were based on the assumption that I would continue to work until I decided to begin drawing my CPP benefits. However, I am aware that I will be receiving less money from CPP since I will not be contributing from the age of 55 onwards. Therefore, it only makes sense that my CPP estimate should be smaller, not larger.
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I have come across a few convoluted calculators online that seem unreliable, so I am reaching out to see if anyone has had success obtaining a more accurate CPP benefit estimate for early retirees. If so, I would appreciate any suggestions on where to look and how to go about getting a more precise estimate. Thank you in advance for any assistance or advice you can provide.
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****** just grabbed a
I use this calculator: [https://www.finiki.org/wiki/CPP_and_QPP_calculator](https://www.finiki.org/wiki/CPP_and_QPP_calculator)
There are links to versions for Excel, OpenOffice and GoogleDocs.
If you did not find the calculators usable, you can try contacting Doug Runchey, who worked for CPP and can calculate for you:
[https://drpensions.ca/index.html](https://drpensions.ca/index.html)
The step by step process is outlined here, if you do want to try it yourself, although it can seem confusing at first (it’s really not that bad, but you do need to setup a spreadsheet yourself):
[https://retirehappy.ca/how-to-calculate-your-cpp-retirement-pension/](https://retirehappy.ca/how-to-calculate-your-cpp-retirement-pension/)
Otherwise, Doug has a CPP thread over at RFD, where he pretty much answers questions free of charge and is pretty helpful:
[https://forums.redflagdeals.com/im-canada-pension-plan-cpp-expert-any-questions-1295017/](https://forums.redflagdeals.com/im-canada-pension-plan-cpp-expert-any-questions-1295017/)
Service Canada has a specific tool to do that on their internal system (ITRDS).
It’s much more accurate than the kind of estimates you can find online because it uses the actual figures they would use to calculate it.
They can leave the following contribution years empty, or fill them independently with figures that you provide them.
The default setting is that they estimate it as if you kept on working at the exact same capacity.
With these figures, they can give you estimates as if you retired during any month between 60 and 70, and compare these options with you.
So if you haven’t had any luck, I don’t know what to tell you about these online calculators, but I know for a fact that the numbers you can get from Service Canada over the phone are based on the actual system that will calculate your CPP amounts, so it’s as close to a 100% accurate answer as you can get.
I used to do this day in and day out while working at the OAS/CPP call centre lol
I can break down the calculation rules for you, if it helps you understand better.
In short, there’s a maximum number of *months* used to make that calculation, which is 12×40 years. There are 47 years between 18 and 65, 42 between 18 and 60, and 37 between 18 and 55, so if you stop working at 55, *100%* of the contributions you made during your working life will count towards the calculation. If you go beyond the 40 maximum, they take out the lowest ones to improve the calculation.
They take the final figures, which are inflation adjusted/prorated contributions, so if you contributed 100% of the maximum on one year, it counts as 100% of the current year contribution amounts.
Then they add all the prorated figures up, divide them by 4 (because it’s meant to make up for 25% of your post retirement income), and divide by 12, for a monthly figure.
That’s it.
The other things that can impact this are child rearing years, if you were the one receiving the child care benefit for the first 7 years of life of a child, they can take those out of the calculation to improve the total amount (something I haven’t seen any online calculator do).
Plus, there are a number of other provisions that the actual calculator uses, and their purpose is almost always to improve the amounts to be paid, so it would make sense that a discrepancy would be in your favour.
Now, there’s the new 33% strata that I personally haven’t worked with but all in all, that calculation is just a glorified cross product, so the real issue is just to have the actual accurate figures.
Either way, you can ask for a letter with the numbers provided over the phone, and you can also request a statement of contributions.
The statement of contributions shows the estimated figures, which won’t include future earnings, and the letter *can* include them, but you can definitely ask for it not to.
In any case, *don’t pay to have it done*. It’s a free service, and the free service is the best available… because it’s the real one.
If you don’t understand how it’s working, ask the person over the phone, they’re trained to answer that question. And if you’re not satisfied, call again. But as someone who used that tool every day for years, I can guarantee you that it’s easy to use for the employees, it’s straightforward, and it will give you an accurate answer.
There are a couple of people who will do this detailed calculation for you, for a price of course. There is a fellow, perhaps in Calgary, who specializes in this, but I don’t remember his name (very helpful, I know). There is also a decently well-known fee-for-service planner in Calgary by the name of Ed Rempel who might be able to do this calculation for you or know who the other person is. I’d google Canadian Fee-For-Service financial planners and see what you find.
CPP is kinda calculated on your best 39 years. Go to your service Canada account for your current estimate. Since you want to know a very rough estimate I would just go with 90% of that number. I mean, you mentioned +/- 500. That’s a big range.
I tried but gave up. I am starting CPP soon and thought I would get a firm amount when I completed the application. Instead, I got an message stating that my application has been approved but the amount I would be receiving would not be decided until the month I was starting because they had to see if I was earning any money up until that point.
I quit work a few years ago and I get my first CPP payment this month. I have resigned myself to just waiting to see what shows up in my bank account. After the first payment there will be some sort of statement available on my government account.
You can ask an expert for a modest fee:
* https://www.drpensions.ca/dr-pensions-services.html
Does it really matter? If your cpp estimate will make the difference of whether you can retire at 55 means that you aren’t financially ready for retirement.
I am putting together the same plan, and I am just using the calculation I see on the service canada website, it will be close, and in my case it doesn’t take into account the child rearing provision.
When you turn 59 you get a letter from the cra
With your years of employment income and how much you get at 60 or 65 etc.
I believe average cpp at 60 is around $490 and 65 $760 /mth
Theres also oas which kicks in at 65
Heres [oas estimator](https://estimateursv-oasestimator.service.canada.ca/en/results)
And gis as well to top up
Call back and be clear with the agent that you will have no income after age 55, and want estimates at age 6X or whatever. They can program that into their calculators…they might have been confused. Call until you get someone who understand what you’re asking.
I went to Service Canada and found the Estimated Monthly CPP Benefits page. It’s interesting that today’s numbers are less than what I got as estimates back in April 2017 when I last ran it. I will be 53 this summer.
|If I Were today|Estimates on 20 Apr 2017|Estimates on 9 Apr 2024|
|:-|:-|:-|
|60|$638.20|$614.94|
|65|$997.18|$960.84|
|70|$1,416.00|$1,364.39|
It’s probably because I haven’t been contributing to CPP the last few years.
I cannot figure out my number. I am effectively retiring early too but will want to defer my CPP until 70. With so many years of low or nil pensionable income, my current CPP calculation will drop when I take it in 15 years.
~$34/yr for each year with income at max CPP
So if you worked 25 years at max (YMPE) it would be 850 at 65 (36% less at 60)
Call 1-800-277-9914 for an exact estimate
I agree with ‘what you believe’. Made sure that any product you use, correctly integrates your loss of benefits from a reduced #yrs, even if you don’t start benefits right away. I’m pretty sure the CRA quote does not, but its hard to tell.
I suppose you could do the math manually using excel, or hire a fee only financial planner to do it for you?
And check those numbers against those on the CPP website?
You might have to play around with a few calculators to get some numbers that you understand and trust.
Just call the CPP/OAS pension centre, they can complete an estimate for you in the phone. However you will not be eligible to receive CPP retirement pension until one month after you turn 60.
Source: I work there
Official cpp calc. https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html
You’ll want to include the optional cpp contribution statement information.
https://www.canada.ca/en/services/benefits/publicpensions/cpp/statement-contributions.html
Read thread later xomment
This will probably be downvoted, but it someone is retiring at 55, what do you care what your CPP is? CPP doesn’t amount to much in the bigger scheme of things, so if you need CPP to retire comfortably at 55, maybe you shouldn’t retire.
*For 2024, the maximum monthly amount you could receive if you start your pension at age 65 is $1,364.60. The average monthly amount paid for a new retirement pension (at age 65) in January 2024 was $831.92. Your situation will determine how much you’ll receive up to the maximum.*
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Unless I am wrong you can only get CPP at age 60… Between age 55 and 60 you are on your own to fund your retirement.
[https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/when-start.html](https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/when-start.html)
Stop using these stupid calculators. You can find out right now using your service Canada account. The exact numbers.
I found a calculator up at https://themeasureofaplan.com/ that I’ve been using.
!RemindMe 2 Days