It is important to choose your retirement age carefully for
a financially secure life post retirement, and more so if you still have a second mortgage
or even a primary one to pay off. Here in Canada, we don’t have a fixed,
compulsory retirement age but sixty-five is considered the norm. At this age,
CPP (Canada Pension Plan) and other security benefits are provided to employees.
While you can opt for CPP at sixty as well, you will get reduced benefits. The
CPP can also be delayed until you turn seventy. Quite a few public sector
employers also offer early retirement with their pension plans.
Earlier, those under the CPP had to do with a 30% cut in
benefits if they opted for early retirement, while those opting for a later
retirement age got an extra 30% as benefits. A Financial
Post report says that by 2016, early CPPers (retiring at 60) will have to
suffer a 36% cut in benefits while those who delay retirement until 70 will get
benefits to the tune of 42%.
According to the director of BMO Retirement Institute, Tina
Di Vito, late CPPers will get a maximum monthly benefit of $1,326. This is in
comparison with $2,370 for employees who delay retirement until 70 in the
Unites States and $1,790 for those retiring at sixty-seven. Despite the lower
benefits as compared to the US, many Canadians are likely to push their
retirement age until seventy.
Public sector employees in Canada are allowed a mid 50 till
late 50 retirement age while private sector workers typically work well into
their sixties. This is due to the fact that employer pensions are offered to 85
percent of public sector employees while the number falls to 25 percent for
their private sector counterparts.
