The Dangerous CPP Assumption Canadians Keep Making

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The Dangerous CPP Assumption Canadians Keep Making

Beavis Wealth 31.03.2026 3 860 просмотров 145 лайков

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When is the best age to start CPP? In this 2026 guide, I break down the math between starting at age 60 vs. 70 and show you how a "Bridge Strategy" can help you maximize your guaranteed lifetime income. Whether you are 45 and just starting to plan, or 64 and ready to pull the trigger, understanding the "math of timing" is essential. We explore the reality of CPP as a partial income replacement, the massive financial impact of delaying until age 70, and how to use your current portfolio to "bridge" the gap. *Key Takeaways* The Reality Check: Why most Canadians won't get the maximum CPP benefit. The Timing Math: How waiting until 70 can increase your payments by 42%. The Bridge Strategy: Using your investment portfolio to fund early retirement so you can delay CPP. Monthly Income: A look at how Harvest ETFs (HRIF & HDIF) can help generate retirement cash flow. Thank you to Harvest ETFs for supporting this educational resource. We take a look at how their Diversified Monthly Income ETFs can help retirees generate the cash flow needed to delay CPP and maximize their long-term guaranteed income. Learn more about the funds discussed in this video: *Harvest Diversified Equity Income ETF* https://harvestportfolios.com/etf/hrif/?utm_source=BeavisWealth&utm_medium=Banner_&utm_campaign=2026 *Harvest Diversified Monthly HDIF* https://harvestportfolios.com/etf/hdif/?utm_source=BeavisWealth&utm_medium=Banner_&utm_campaign=2026 *Video Chapters* 0:00 - The 2 Dangerous CPP Assumptions 0:48 - Reality Check: Is CPP Enough for Retirement? 1:42 - The "Base Layer" vs. Actual Cost of Living 2:33 - Why CPP Timing is a Critical Decision 2:57 - The Most Common CPP Mistake Canadians Make 3:32 - 5 Reasons People Take CPP Early 4:40 - The Math: Age 60 vs. Age 65 vs. Age 70 5:41 - CPP as "Longevity Insurance" 6:04 - Generating Retirement Income (Harvest ETFs) 7:43 - The "Bridge Strategy" Explained 8:59 - Converting Portfolio Income into a Lifetime Pension 9:33 - Summary: Your Most Important Retirement Decision 10:04 - Bonus: What Happens if You Retire Abroad? 🤗 Join over 500,000+ DIY Investors on the Blossom app (FREE) ➤ https://getblossom.onelink.me/SOfu/brandonbeavis ----------- 📥 Subscribe to the Pulse Newsletter for Weekly Market News ➤ https://thepulse.beaviswealth.com/ Courses & Training - The Investing Academy ➤ https://bit.ly/theinvestingacademy Follow Us On Blossom ➤ https://getblossom.page.link/brandon Instagram ➤ https://bit.ly/3Oechgh LinkedIn ➤https://bit.ly/3RLndF7 Website ➤ https://www.beaviswealth.com ----------- The above affiliate links are provided for your convenience, and if you click on a link and end up purchasing a product or service, this channel may receive compensation for the referral. We have personally vetted each of these companies and services and, in our opinion, we believe they provide value to our viewers, depending upon your individual circumstances. Business Inquiries: support@theinvestingacademy.ca ----------- Beavis Wealth Disclaimer: The views and opinions shared on this channel are for informational and educational purposes only. Although previously licensed, the contributors are no longer industry participants and are not licensed to provide financial advice. They strive to provide you with educational information in an entertaining manner. Always do your own research and due diligence before investing. Generally speaking, you should consult a licensed investment professional before investing.

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The 2 Dangerous CPP Assumptions

A lot of Canadians approach their retirement with two very common but very wrong assumptions. First assumption is that the Canada Pension Plan benefits will provide a comfortable retirement income. Secondly, is that they're just going to start taking their CPP as soon as they can. When you think about it, the government says you can start collecting at age 60, so why would you wait? When we look at these two things a bit closer, you will find some very serious problems. In the video, I want to walk you through these two things that every Canadian who's approaching retirement should understand. First, the reality of what the CPP is actually designed to do. Secondly, how the decision about when you start your Canada Pension Plan can have a much bigger impact on your retirement income than those people realize. Thank you to Harvest ETFs for supporting this video. I will talk more about them a little bit later in this video. Okay, let's start

Reality Check: Is CPP Enough for Retirement?

with a bit of a reality check here. One of the biggest misconceptions that you hear about that I see is the belief that government benefits will provide for a comfortable retirement. The Canada Pension Plan, it is a valuable program. Don't get me wrong on that. It does provide reliable income. It's adjusted for inflation, and it lasts for your whole life. The Canada Pension Plan came into effect in January 1966. The original structure was to replace partial income. That's the way the program was designed. In other words, it was meant to supplement personal savings and your workplace pensions, but it was never designed to replace them. Now, today, even if you qualify for the maximum CPP benefit, which most Canadians don't, around 87% of us don't qualify for that maximum amount, the income is still only one piece of the retirement income puzzle. I'm going to talk more about that in just a minute here. The CPP does help to build a base

The "Base Layer" vs. Actual Cost of Living

layer of retirement income, but that's all it is. It is just a base layer. When you compare the payments to the actual cost of living in retirement, the gap is really obvious. You look at things like housing costs, food, travel, health care, lifestyle spending. Those don't just disappear when you stop working. For a lot of people, most I would say, maintaining a comfortable retirement lifestyle requires multiple sources of income. Now, typically, those include government programs like the CPP and the Old Age Security program, personal savings like RRSPs, TFSAs, investment income from non-registered portfolios. Some people are fortunate to have employer pensions. Then you look at things like annuities. Some people downsize their home. Some people even work part-time. And this is where the decision about when to start your CPP becomes critical. I want to be clear on

Why CPP Timing is a Critical Decision

something right up front. The CPP is not a fixed benefit. That's the first thing you have to understand. It depends on your contributions. It depends on when you start, anywhere between age 60 and 70, and there are permanent reductions for early starts, increases if you decide to delay the take-up on that. Let's look here at what Canadians actually do. So many make a mistake here. Most

The Most Common CPP Mistake Canadians Make

Canadians take CPP early. Roughly 40% start right at age 60 when they're first eligible. The majority begin taking before 65. Very few wait until age 70, even though that produces the highest lifetime benefit. And this really flies in the face of the research that shows that for a healthy Canadian, delaying to age 70 is often the better choice that you can make. You qualify for a 42% higher base pension if you hold off till then, and that can result in, in many cases, more than $100,000 in secure lifetime income. So, why do so many

5 Reasons People Take CPP Early

people take it so early? Well, the math clearly favors waiting, but stats show that Canadians choose those early starts for a lot of different reasons. Now, some of these are practical. The most alarming to me, though, is the lack of awareness. A 2018 government poll, highlighted in a 2020 report, found that roughly 2/3 of Canadians didn't understand the financial benefits of delaying. That, to me, is alarming. They need to understand the decision that you're making here. Another reason is just an immediate need. Some people actually simply require the cash flow to cover their essential expenses, pay down high interest debt when they go into retirement. Health concerns is something else. Those who have a shorter life expectancy, maybe a family history of illness, prefer that sort of bird in the hand strategy. GIS, Guaranteed Income Supplement. For a lot of low-income seniors, taking CPP early can sometimes be a strategic move that would avoid any clawback. Then there is the investment strategy. A lot of people believe that they can invest the early payments themselves, outperform the government's guaranteed increase. Now, for some context here, the average CPP retirement benefit today is $803. 76.

The Math: Age 60 vs. Age 65 vs. Age 70

I mean, let that sink in. $803 a month is the average. The maximum benefit you can qualify at age 65 is $1,507. 65 a month. Let's look at an example here. Let's assume you're entitled to a $1,000 a month benefit starting at age 65. If you start your CPP at age 60, that amount is then reduced by 36%. That brings your payment down to 640 bucks a month. Now, on the other side, if you delay the CPP until age 70, that same $1,000 benefit increases by 42%. So, that results in $1,420 a month. Now, that is a huge difference. Because CPP is indexed to inflation, and it's paid for life, those larger payments, they can provide you with real long-term financial stability. And this is why so many retirement planners often lean towards deferring CPP when it is possible, when it is suitable in your personal circumstances. I would like you

CPP as "Longevity Insurance"

to think of CPP as a form of longevity insurance. The longer you live, the more valuable those payments are going to become. Deferring CPP essentially that allows you to lock in a higher government-backed, inflation-adjusted pension for the rest of your life. So, for retirees who are concerned about running out of money, that can be extremely valuable. Now, I do want to

Generating Retirement Income (Harvest ETFs)

take a moment and thank Harvest ETFs for supporting this video. In just a moment, I'm going to talk about one of the most important and often overlooked strategies in retirement planning. We've already talked here about how the idea of delaying CPP can increase your long-term inflation-adjusted income, but when people hear that, there's a question that comes up almost immediately. That sounds great, but how do I replace the income in the meantime? And that is exactly what we're going to walk through in the next segment of this video. One approach that a lot of retirees consider is using their portfolio to generate monthly income early in retirement. This essentially creates a bridge until CPP starts. And this is where some of Harvest ETFs can come into the conversation. Two examples, the Harvest Diversified Equity Income ETF, the ticker is HRHF, and the Harvest Diversified Monthly Income ETF, the ticker is HDIF. And both of these are designed to provide high monthly income through a diversified portfolio of equity income ETFs using covered call strategies. Now, based on the most current data, HRHF has a current yield of 9. 67%. HDIF is a little bit higher at 13. 06%. The difference between these two funds is the structure. HRHF does not use any leverage, whereas HDIF does use modest leverage around 25%. That can enhance income, but does add some risk considerations. Now, as I go into the next section of this video, please keep that in mind. How do you create regular income early in retirement so you can give yourself flexibility to delay CPP and potentially improve your long-term plan? Let's walk through that. As I

The "Bridge Strategy" Explained

mentioned, one of the main reasons that people start CPP early is simply because they want, or in some cases need, the extra income. Let's say they retire at 60 or 62, CPP looks like the easiest way to start generating a cash flow. As we've seen, though, starting CPP early, it locks in those smaller payments permanently. An alternative approach that I'd like you to look at now is to use your investments to generate income during those early retirement years while delaying CPP. That's often referred to as a bridge strategy. Instead of relying on the CPP right away, you temporarily draw income from your investment portfolio, and that income can come from several different sources. We talked about those earlier. Might come from dividends generated by stocks. Might come from ETFs. It might come from interest income on bonds or GICs. Or it could come from an investment strategy that is specifically designed to generate higher income such as covered call ETFs. The goal here is simply to generate enough income to support your spending needs during those early retirement needs. Then, when the CPP does eventually start at a later date, those larger payments will replace some of the income that previously came from the portfolio. In effect, you can think of it this way. You're converting

Converting Portfolio Income into a Lifetime Pension

a temporary portfolio income into a larger permanent government pension. Now, for a lot of retirees, that trade-off can make sense. It does allow them to increase their guaranteed lifetime income, but they still maintain cash flow that they need in those early years of retirement. The exact strategy, of course, will always depend on an individual's financial situation. The key takeaway, though, is this. You don't have to start taking CPP early just because you need the income. Your investment portfolio can often cover the gap that will allow you to delay CPP take-up to a later date. Now, when you

Summary: Your Most Important Retirement Decision

step back and look at the big picture, retirement income planning really comes down to a choice. Instead of viewing the CPP as the first income source that's available, it can sometimes be more effective to view it as the last one that you actually turn on. And if you're approaching retirement, it is worth spending some time to think through that decision very carefully. Bottom line, when it comes to the CPP, the choice that you make now at the start can be one of the most important and costly retirement income decisions that you ever make. Have you ever wondered what

Bonus: What Happens if You Retire Abroad?

happens to your CPP when you retire in another country? I'll tell you all about it in this video right here. As always, thanks for watching. We'll see you in the next video.

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