Receive – and When
How Much Can You Expect From Government Pension Plans?
Determining your government pension plan benefits is an important aspect of retirement income planning, especially if you plan to rely on them when you retire.
You can get an estimate of your benefits at the Service Canada website. The Retirement Income Calculator will walk you through a series of steps to help calculate your retirement income from government pension plans. Keep in mind that it is only an estimate. Your actual benefit amount will be determined when your benefits begin, and will probably vary slightly from your estimate due to updates in your earnings, inflation and assumptions the calculator makes about your future earnings and length of employment.
The calculation is based on your full retirement age, when you retire and whether you continue to work while collecting benefits.
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Full Retirement Age
You must be at least 65 years of age to receive Old Age Security (OAS) and Guaranteed Income Supplement (GIS). However, the 2012 budget introduced changes to the program that will gradually increase the eligibility age for OAS and GIS over a six-year period, to age 67 by January 1, 2029.
There are other eligibility requirements in order to receive OAS and GIS such as legal status, number of years you have lived in Canada and, in the case of GIS, your total income.
Although the full retirement age for The Canada Pension Plan (CPP) is 65, there is a little more flexibility and you can start receiving benefits earlier. If you start receiving benefits before 65, you could greatly reduce your payments. See the Service Canada website for additional information about these benefits.
Retiring Early or Late
You don't have to wait until your full retirement age to retire. You can retire earlier or later, though both will affect your retirement benefits.
Although you can begin receiving CPP payments any time after age 60, your payments will be larger if you wait until after you turn 65. If you start your pension before you turn 65, your pension is reduced by a percentage each month that you take it before age 65. Your benefit amount will not readjust once you reach full retirement age. The reduction is permanent, to compensate for drawing on CPP for a longer period of time.
Working During Retirement
You can work after you begin collecting government pension plan benefits; however, if you are receiving GIS payments, they will be affected — or eliminated — by the increase in income.
Know Your Benefits
Take into consideration the factors that determine your Federal retirement benefits when you're deciding when to retire and when to begin collecting benefits. Knowing how much you'll receive, and when, may be a key factor in planning your retirement.
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