Is it better to start CPP in December or wait until 2027?

With two months left in 2026, it’s time for some insight into when you should start your CPP pension.

Let’s say you are on the verge of retirement and are deliberating whether to start your Canada Pension Plan (CPP) this December or wait until some time in 2027.

As an example, let’s consider Trevor, who is turning 65 in June of 2027. If he starts his CPP pension in December he will receive $1,450 a month, which is not quite the maximum payable because he is a few months short of 65.

If Trevor delays starting his CPP by one month, he will be temporarily “underwater” – meaning he will have received less CPP pension than if he started receiving payments this December. As we will show, this is not a problem for Trevor because he gets a bigger starting CPP pension by waiting and the catch-up period is not very long.

The chart shows how underwater Trevor is if he starts his CPP pension in January 2027 or June 2027. Both are compared with a starting date of December 2026. We will call these two possibilities the “January Scenario” and the “June Scenario.”

Cumulative gain or loss if CPP starts

in 2027 vs. Dec. 2026

Future months (month 1 is Dec. 2026)

Probability of survival: 75%

Probability of

survival: 93%

When Trevor

is underwater

THE GLOBE AND MAil, source: AUTHOR’S CALCULATIONS

Cumulative gain or loss if CPP starts

in 2027 vs. Dec. 2026

Future months (month 1 is Dec. 2026)

Probability of survival: 75%

Probability of

survival: 93%

When Trevor

is underwater

THE GLOBE AND MAil, source: AUTHOR’S CALCULATIONS

Cumulative gain or loss if CPP starts in 2027 vs. Dec. 2026

Future months (month 1 is Dec. 2026)

Probability of survival: 75%

Probability of

survival: 93%

When Trevor is underwater

THE GLOBE AND MAil, source: AUTHOR’S CALCULATIONS

Under the January Scenario, the maximum he is ever underwater is just $1,450 (plus maybe $4 of lost interest) since he has missed just one payment. More important, it will take just 36 months before he ends up ahead – that is his catch-up period – and after that, the payoff from having waited keeps on growing. After 230 months, when he is age 83, Trevor will be ahead by about $10,000.

The June Scenario shows the same pattern except that Trevor is underwater by as much as $8,700 and remains underwater for longer – until January 2035, when he is 72. Is it a mistake then to wait until June 2027?

Absolutely not, provided that Trevor has other sources of income before June and that he expects to live longer than age 72, which he should. Mortality tables show that Trevor has a 93-per-cent chance of surviving until age 72.

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By the time he is 83, Trevor will be ahead by more than $15,000 under the June Scenario which is considerably more than under the January Scenario. Of course, he has to live until 83 to realize that gain.

The odds are that the June scenario is better since the probability of living until 83 is about 75 per cent. I would take that bet.

This illustration may give rise to a few other questions:

1. Q: What if you’re 60 instead of 64? A: Essentially the same math applies and you would be better off waiting until June 2027, if you can. The same is true if you are between 65 and 70 and haven’t started CPP yet, though the chances of survival until the payback period is over are slightly lower.
2. Q: Is starting even later in 2027 better again? A: In almost every case the answer is yes as long as you have other sources of income to tide you over and if you haven’t turned 70 yet.
3. Q: So, should anyone who is turning 65 in 2027 start their CPP pension in late 2027 then? A: Not really. In general, people should still be thinking of starting their CPP pensions at a later age, perhaps as late as 70 (or as late as 72 in Quebec). The exact age depends on one’s personal circumstances. In Trevor’s case, he was hell-bent on starting his CPP soon – even if it isn’t the optimal age.
4. Q: Does the same pattern hold true every year? A: No, since it depends on the difference between wage inflation and price inflation. If price inflation exceeded wage inflation, which sometimes happens, then it would have been better to start CPP in December of the current year.
5. Q: How do I know what CPP will be in 2027? A: Price inflation for CPP purposes is based on CPI up to October, not December, and wage inflation is based on changes in national wages only up until June. Hence, we can predict 2027 now with some confidence..
6. Q: Why can’t all your advice be this practical? A: Ah!

Frederick Vettese is former chief actuary of Morneau Shepell and author of the PERC retirement calculator.