Ep 157 - How to Delay CPP to Age 70 Without Sacrificing Retirement Income
Delaying taking Canada Pension Plan (CPP) to age 70 can supercharge retirement income, offering a guaranteed, inflation-adjusted 8.4% annual return that is backed by the government. In this podcast, Joe Curry explores how high-net-worth Canadians can bridge the income gap through smart strategies like the bond bridge and annuity bridge, ensuring financial security today while maximizing CPP for life.
Key Points
· Delaying CPP provides longevity insurance—boosting benefits by up to 78% between age 60 and 70, fully indexed to inflation.
· Bond Bridge Strategy: Allocating safe, liquid investments like short-term bonds to mimic CPP income until age 70 while keeping liquidity.
· Annuity Bridge Strategy: Using a term-certain annuity to replicate CPP payments until 70, ensuring predictability but sacrificing liquidity.
· Mindset Shift: Drawing from your portfolio before CPP isn’t “spending down”—it’s investing in guaranteed lifetime income.
· Managing Sequence of Returns Risk: Strategic portfolio management with dynamic withdrawal strategies ensures income sustainability and lifestyle protection.
Ideas Worth Sharing
“Think of delaying CPP not as spending down your portfolio, but as investing in government-backed, inflation-adjusted income for life.”
“Delaying CPP is really about buying peace of mind—your personal longevity insurance.”
“The bond bridge ensures you maintain lifestyle income today while unlocking the full benefit of CPP at 70.”
“An annuity bridge offers simplicity and predictability, but you trade away liquidity for guaranteed payments.”
“Delaying CPP doesn’t mean delaying your dreams—you can still live the retirement you want today while securing higher guaranteed income tomorrow.”
Resources
Retirement Planning Simplified
True Wealth Roadmap - Matthews + Associates’ Retirement Planning Process
Delaying CPP: How to Maximize Retirement Income Without Sacrificing Lifestyle
For many Canadians approaching retirement, one of the biggest financial decisions is when to take Canada Pension Plan (CPP) benefits. While many rush to claim CPP at age 60, delaying until age 70 can result in a guaranteed, government-backed, inflation-adjusted 8.4% annual increase in benefits. For high-net-worth Canadians in good health, the math often points to waiting—but the key concern remains: how do you cover your income needs in the meantime?
This is where strategic planning comes in. Delaying CPP doesn’t mean delaying your lifestyle. In fact, it’s about reframing the decision: you’re not simply spending down your savings, you’re investing in longevity insurance—an income stream that ensures financial security in your 80s, 90s, and beyond.
The Power of Delaying CPP
If you start CPP at age 60, your benefit is reduced by 36% compared to the standard age of 65. Waiting until age 70, however, increases benefits by 42%—a staggering 78% swing from age 60 to 70. That means someone eligible for $1,000/month at age 65 would receive only $640/month at 60, but $1,420/month at 70. With inflation indexing, the long-term impact is even greater.
Bridging the Income Gap
Of course, many Canadians worry about how to fund retirement while waiting for CPP. That’s where bridge strategies come into play:
Bond Bridge: Carve out a portion of your portfolio into safe, liquid investments such as high-quality bonds or high-interest savings. This creates a predictable “bridge income” that mimics CPP payments until age 70—while keeping liquidity available.
Annuity Bridge: For those who prefer simplicity and predictability, a term-certain annuity can replicate CPP income. While you sacrifice liquidity, you gain guaranteed payments without market risk.
Both strategies ensure you can maintain your lifestyle today while benefiting from higher CPP income later.
Managing Your Portfolio Along the Way
Even with a bridge in place, the rest of your portfolio must still be managed strategically. A thoughtful approach, considering risk tolerance, retirement income style, and dynamic withdrawal strategies, can help minimize sequence-of-returns risk and ensure your portfolio supports both present spending and future security.
Retirement Without Compromise
At the end of the day, delaying CPP isn’t about postponing your dreams—it’s about maximizing your financial peace of mind. With the right bridge strategy and professional guidance, you can enjoy travel, hobbies, and family today, knowing your retirement income foundation is stronger for tomorrow.
To explore whether delaying CPP is right for you, visit Matthews + Associates and discover the True Wealth Roadmap, a proven process to bring clarity and confidence to your retirement planning.