Retire Early?

So you want to retire early do you? Well what’s considered early, 50? 55? 60?  According to Revenue Canada you can start collecting early retirement benefits from the Canada Pension Plan at at 60.  This of course comes with reduced CPP benefits.  Your benefits are reduced by .5% per month for every month that you start to take your CPP benefits before the age of 65.  So if you were to start your benefits the month after you turn age 60 your benefits would be reduced by 30%.

So how do you apply for CPP if you choose to retire early?  You can visit the Service Canada web page at www.servicecanada.gc.ca and fill out an online application.  If you haven’t decided whether or not you are going to apply yet you can also contact Service Canada to find out what your estimated monthly CPP benefits are going to be, the closer you are to retirement the more accurate the numbers will be.  Your benefits depending on how much you have paid into the plan which in turn is dependent on how long you have been working in Canada and your income level.

In order to start collecting CPP you need to stop working, or at least stop getting paid by the end of the month before the month before that you will begin receiving payments.  If you choose to stop your CPP payments once you’ve started to receive them you may do so for up to six months, but be aware that you must repay all the benefits that you receive during that period.

So as you can see your idea of early retirement may not be the same as the governments!  You may wish to retire early at 55, that just means that you’re going to have to save enough before than to provide you with enough income to get by without government supplements.  Careful planning and disciplined savings can get you there!

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