Canada Pension Plan Optimization

Written by Doug Dahmer  |  September 14, 2015

My wife, Nancy, is a healthcare professional, and I am never sure how much interest she has in financial matters. She appears to listen attentively when I start to ramble about issues affecting retirement, but I think she does so to humor me. She is, I think, more interested in new techniques for wound management than tax minimization or income optimization.

So, I was really surprised when she handed me a slip of paper with an email and told me about one of her colleagues named Shirley. Shirley is in her final 18 months of work. Her husband is looking to retire before that. He will be 63 and she will be 61, when they pull the trigger on their retirement.

Shirley had mentioned in one of her conversations with Nancy that like their parents, she and Dan would be starting their CPP right away, to align with when they began to draw upon savings to fund their retirement. A light went on in Nancy’s head as she remembered my months ago breakfast lecture on CPP entitlements and the financial benefit of starting CPP at the right time.

All she said was “You should ask Doug when the best time to start CPP is, for you.” Who would have thought it? Nancy = ace referral person.

I sent Shirley a quick email to encourage her to take great care in her decision and suggested a process to help her investigate the implications of making a less than an optimal decision. My email focused on three main issues:

  • Most people fail to appreciate the cumulative financial significance and income security that CPP adds to their retirement lives. Consequently, they tend to under estimate the financial consequences of making a poor decision.
  • As of 2012, for the first time in over 48 years, the rules around CPP had changed. These changes now make CPP start date calculations significantly more complex and important.
  • Poorly made start date decisions can have significant and unanticipated implications upon the widows’ allowance which the surviving spouse is entitled to.

To validate my concerns, in my email I suggested that she try the Emeritus CPP Optimizer tool at The optimizer would require her to put in three simple pieces of information for Shirley and her spouse:

  1. Each of their birthdates – to establish age.
  2. Their best guess at how long each of them would live – critical to incorporating the impact of survivor’s benefit entitlement.
  3. Their projection of what they would receive from CPP if they both waited to age 65 – which would have been impacted by their histories of employment income between the ages of 18 and 65 inclusive.

She agreed to give it a try.

I was quite confident that she would discover, as most others do, that the cumulative difference in total lifetime income benefits between a poor decision and the optimal decision, often exceeds $100,000.

I explained that each of them, individually, had 121 different start dates to choose from (each month between reaching age 60 through to the month they reach age 70 inclusive)… that the best start date for one spouse, is frequently not the best start date for the other. As a result, the number of possible combinations and permutations that need to be considered to make the best decision is 14,641. Finally, I warned her that far too many Canadians continue to rely upon ‘conventional thinking’ and like a magnet this readily available, outdated and dangerous ‘wisdom’ has a bad habit of leading people to toward the poorest of decisions.

Less than 20 minutes later, I received a call in response to my initial email.

As suspected, she had discovered their specific difference, between making a poor decision and making the optimal decision exceeded $135,000 over their lifetime.

Now armed with a clear awareness of the value of making the right decision, you can imagine how anxious they were to meet, to learn the specific start dates that would provide the largest lifetime incomes for the two of them.

As we completed the process they remarked to me how easy it was to make far superior decisions, when you have access to the right tools and how thankful they were that they had not proceeded with their original plans. Had they done so, they would have had the rest of their lives to look back in regret at how a poor decision would have reduced their lifetime entitlements by well over $100,000.

Unfortunately very few decisions relating to retirement come with an UN-DO, or RE-DO button. A wrong decision can leave you looking back in regret, for the rest of your life.


Optimize My CPP


The Emeritus CPP Optimizer is one of the many tools we, as Retirement Income Specialists, rely upon.

At Emeritus, we have developed and refined our C3 Retirement Income Planning Process to raise awareness and help people focus upon the specific aspects of planning that matter, as you enter the second half of life and transition into your drawdown years.

These critical planning issues can be divided into two distinct categories:

  1. Things you can control;
  2. Things you cannot control.

For the issues you have control over, such as opportunities to optimize retirement incomes and/or minimize taxation, we rely upon our suite of planning tools to empower clients to make the best possible decisions.

For the critical planning aspects that fall outside of your direct control, such as dealing with market volatility and or the possibility of premature death of a spouse, our job is to put protective processes and mechanisms in place.

The Emeritus CPP Optimizer provides a good example of how we translate specialized retirement income planning into hundreds and hundreds of thousands of incremental spending dollars and net worth during the second half of your life.

Optimize My CPP

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