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Facts and considerations about the Canada pension plan/Quebec pension plan

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Many Canadians who are at retirement or nearing retirement realize they have been contributing to the Canada Pension Plan/Quebec Pension Plan (CPP/QPP) for the majority of their working lives, but they do not know when they will receive from CPP/QPP and how much. Here are four important facts about CPP/QPP to educate you about how much and when you should expect CPP/QPP payments.

1) You can begin receiving your CPP/QPP payments at age 60. In fact, you do not need to stop working between the ages of 60 to 65 to receive CPP/QPP pension payments. But, if you receive your CPP or QPP pension early and continue to work, you are expected to continue contributing to CPP/QPP until you fully retire.

2) From age 65 to 70, if you continue to work, you may elect out of paying CPP premiums (but not QPP premiums). This election to opt out of CPP premiums may only be done once per calendar year. Plus, the late pension augmentation increases from 0.5 percent to 0.7 percent per month for each month after age 65; this means the total increase in your CPP pension from age 65 to 70 is 42 percent.

3) If retiring at age 60, you can either take a reduced CPP/QPP pension or you can wait until age 65 to get the full amount. This total amount is based on your earnings and contributory period. Though, CPP/QPP earnings are adjusted for inflation and growth in wages.

4) The CPP/QPP death benefit is a lump sum payment of up to $2,500 and a survivor's benefit. The maximum monthly amount for a survivor's benefit, which is the retirement plus survivor benefit, cannot exceed $986.

Some things you should consider before taking early CPP/QPP benefits are whether or not you have stopped working, whether or not you are receiving a survivor's benefit, if you are single, and if you are unhealthy. If you have stopped working, it makes most sense to take the CPP/QPP benefits early because if you are no longer contributing to CPP/QPP, no earnings during your non-contribution period could lower the overall benefit collected later. If you are receiving a survivor's benefit and CPP/QPP benefits would exceed the maximum, you should not wait to receive your benefits because the amount you receive will not increase. If you are single, it is best to receive CPP/QPP early to ensure you receive as much from the pension plans as possible. Finally, if you are unhealthy, you should apply for disability benefits because they are higher than CPP/QPP benefits.

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