A Legacy for Life-Saving Care
Taking CPP Early
In the Spring 2016 issue of Silver and Gold Magazine, we
shared Jim Yih’s article on whether taking CPP early was a wise
idea or not. Jim is a financial advisor, best-selling author, and
financial speaker on wealth, retirement, and personal finance.
Below an excerpt for interest purposes and not advice. For complete
article please visit our website: www.silvergoldmagazine.ca
M arried for over 60 years, Harold and Marjorie Garton were
long-time residents of Port Dover and Simcoe. On the streets
of Port Dover, Marjorie and Harold could often be found
cycling together, even well into their retirement years. And to
all those who knew them, it was clear that their commitment
to community and to supporting those who supported them
was central to this couple.
Marjorie and Harold were very involved in local community
events related to conservation, the protection and prevention
of cruelty to animals and wildlife, the local theatre, sporting
events and especially baseball, and their church. Together,
they planned to make donations through their estate to many
of the area’s organizations that were important to them.
When, about 10 years ago, Harold was faced with a life-
threatening aneurysm, he credited St. Joseph’s Healthcare
Hamilton with saving his life. Grateful for the excellent care
he received at the Hospital, he decided to make a bequest in
his Will to St. Joe’s to help ensure others would have access
to the same excellent care for generations to come.
In recognition of Harold and Marjorie’s generous estate
gift, St. Joe’s was pleased to name the Harold & Marjorie
Garton Courtyard, an internal courtyard within the Mood
Disorders Unit at the Margaret & Charles Juravinski Centre
for Integrated Healthcare on St. Joe’s West 5th campus, in
their honour.
Now, the Garton’s gift and the impact it will have on patient
care and on the community will be felt for years to come.•
For more information on planning a bequest to St. Joe’s,
please contact Lisa Gonnering, Manager Estate & Gift Planning
at: 905-522-1155 ext 35978
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silvergoldmagazine.ca
MONEY MATTERS
Janet and Beth are twins. Let’s assume they both
qualify for the same CPP of $502 per month at age 65. Let’s
further assume, Beth decides to take CPP now at age 60 at
a reduced amount while Janet decides she wants to wait till
65 because she will get more income by deferring the income
for 5 years.
Under Canada Pension Plan benefits, Beth can take income
at age 60 based on a reduction factor of 0.58% for each month
prior to her 65th birthday. Thus Beth’s benefit will be reduced
by 34.8% (0.58% x 60 months) for a monthly income of
$327.30 starting on her 60th birthday.
Let’s fast forward 5 years. Now, Beth and Janet are both
65. Over the last 5 years, Beth has collected $327.30 per
month totalling $19,638. In other words, Beth has made
$19,638 before Janet has collected a single CPP cheque. That
being said, Janet is now going to get $502 per month for
CPP or $174.70 per month more than Beth’s $327.30. The
question is how many months does Janet need to collect more
pension than Beth to make up the $19,638 Beth is ahead?
It will take Janet 113 months to make up the $19,638 at
$174.70 per month. In other words, before age 74.4, Beth
is ahead of Janet and after age 74.4, Janet is ahead of Beth.
This math alone is still a very powerful argument for taking
CPP early. Another way to phrase this question is, “How long
do you expect to live?”
Note that the mathematical break-even point changed again
in 2016, when the reduction factor increased from 0.58%
per month to 0.6%. So for the above example, in 2016, Beth
would get $321 instead of $327.30 at age 60. This will move
the break-even point from age 74.4 to age 74.
When will you most enjoy the money?
When are you most likely to enjoy the money? Before
age 74 or after age 74? Even though the break-even point
is three years sooner, for most people, they live the best
years of their retirement in the early years. I call these the
‘go-go’ years, which is one of three phases of retirement:
See www.retirehappy.ca/three-phases-of-retirement. •
Lots more online! www.silvergoldmagazine.ca