Some Of You Should Start CPP RIGHT NOW - Fred Vettese Globe and Mail

hi my name is Adam welcome to the channel thank you for joining us today today we're going to talk about a very important topic that affects every single one of you no matter what your age is and that is around CPP and OAS so there's a few parts of this video I want to cover uh firstly I'm going to address the Global Mail article that Fred Vitesse had out now Fred vitess has a wonderful book if you have not read his book or don't have his book I highly recommend it as a purchase I'll put a link below there again retirement income for Life someone introduced me to this book about a year year and a half ago and it literally I don't have it with me because it sits on my bedside table like that that's kind of my bedside table book I've probably read it through four or five times the majority of what's in that book is what we talk about on this channel deferring CPP and kind of tax strategy to maximize income minimize tax and just have a proper plan in place now Fred's article in Global Mail talked about a bit of an anomaly this year with regards to when you should collect CPP and Fred's a big proponent to you look defer CPP all the way till 70. but there's always these things that come up and 2022 is no different so 2022 what happens is if you're getting close to 70 and we're deferring CPP it might make the most sense to take your CPP before the end of this year so start it in by the end of this year ideally you know November December what that does is it's actually going to give you more money both now and down the road and I'll explain how that works here in a second let me first take a step back and start with how is CPP like the growth of CPP and OAS calculated and you know in simple terms and where you read everywhere including including the government of Canada website is if you defer or delay CPP past age 65 it's 0.7 increase every single month OAS it's a little bit less it's point six percent increase now the increase on Canadian pension plan the CPP is based on before you take it is based on ympe or wage growth once you take CPP then future growth is based on CPI or inflation so what we've run into this year is ymp your wage growth is actually lower than inflation typically wage growth is a bit higher than inflation this year is a bit lower now another addition into here and again this is through a conversation I had with Doug grunchy today and we're just talking about the article and the calculation how this all work and how it affects each and every one of you watching this video and Doug said the big factor here one of the big factors here anyway is that CPI when it talks about like your bumper increase in the amount of CPP that you collect is the one your average so whatever CPI is for the year is what you're going to get bumped whereas wage growth they look at a five-year average you know you can have one big year of inflation like we've had and it kind of skews this do I defer my CPP or do I start taking it now we don't have CPI numbers for October quite yet and we also don't have the ympe which comes out in November probably public fully released in December which is a little bit too late to get going for CPP to collect in 2022 so we're kind of guesstimating numbers but again I'm going to put up on a screen this is an automated reply that Doug had sent out to me and then I had a conversation with him after but you can see so point one the precise figures for the CPI increase from 2022 to 2023 cannot be determined until October uh CPI amounts of release which will be in late November number two the 2023 ymp figure has not been officially released but it should likely be 66 500. this would make the five-year average ymp ending in 2023 61 820 again a five-year average which would mean the increase of approximately 3.55 over 2022 combining points one and two above if you start your CPP in December 22 versus January 2023 you will receive that one extra payment plus your monthly CPP payment will be approximately two and a half percent higher for life now how does that that work so again I had a conversation with Doug today and basically at a very high level without going into the detail and again if you fall into this category and I say if you're 68 or 69 and you know you turn 70 or 69 in 2023 and you think well maybe it just makes sense to take it now reach out to Doug he can do a calculation for you and help you walk through that process again the calculation for CPP is very complicated there's a lot to it and it's not public information like you have to hire someone like Doug who specializes in this to make it happen so reach out to Doug will put his contact information below but what happens is if you start your CPP in December let's say of 2022. at the end of the year start of the year so January 2023 you get an increase based on CPI which again is six and a half percent you're going to get a big bump in your payment whereas if you wait till January 2023 to start collecting your CPP then the bump into 2023 is based off ymp which is wage growth which is lower so what happens this year is you're going to get a bigger bump heading into 2023 off inflation versus wage growth and again if you're already taking it you're going to get the inflation bump if you're not taking it and you're waiting deferring it you're going to get the wage bump which is a bit lower so again you want the inflation bump not the wage bump and I think Doug said it well on that you know this is an opportunity not misplanning right the planning day and Friday even says this too the planning makes sense to defer your CPP to 70 all the time but there's these odd anomalies or opportunities if you want to call them that where hey it actually does make sense to take it a bit earlier and again the thing you're going to want to watch for because my question would be okay well for all of you watching this that are say 65. should you start CPP well you'd have to have the crystal ball to figure out like is inflation going to stay higher than wage growth for years going forward and if you think yes and maybe you take CPP if not then not typically wage growth has been about one percent higher than inflation for many years this is again an anomaly this year going forward differential 70 is going to make the most sense most of the time and so that's what you have to plan around so is this an opportunity for those that are maybe 69 years old this year sure it is it's maybe you jumped the gun a little bit by a few months um and get that CPP going but for the rest of us that are waiting uh waiting does make the most sense most the time and so that's what you should be doing another comment that Doug had mentioned on our call was that again this is a bit of a blip and has it happened before it has um you know Doug didn't have the numbers on that obviously but it has happened before it'll probably happen again it's something to keep an eye out and again you know lean on channels like us you know articles like Fred puts out to kind of say okay this might be one of those years again do I need to run the calculation to figure out if I fall into this basket or not I know for most of you if you're younger if you're full if you're not in that 68 69 range I think you can pass this one by keep deferring that CPP it still does make the most sense I think ymp will come higher than inflation going forward I think we could have some low much lower inflation going forward again if you look back to kind of the the early to mid 80s into early 90s inflation was quite high and then it dipped right back down are we going to see something like that again it's year-over-year growth we have really high numbers now if they come down that's going to help you know your CPP number for deferring it so I think we're going to get back to normal uh Doug kind of mentioned the same thing of course no one has the crystal ball but again if you're 68 69 this is something that you should be looking at reach out to Doug have that calculation done we'll put his link below and again if you haven't read Fred's article we'll link that below as well it brought up more questions and answers and that's why I want to bring out this uh this video today I need to ask Fred to come on the channel he said he's going to hold off on that but we'll get him on eventually I'm sure um and we're going to talk about this concept a little bit more what to look out for in that CPP and all that again if you haven't checked out his book we put that link below as well very good read highly recommend it if you're kind of 45 plus thinking it's starting to gear into retirement cash flow and all that it's a great read and it's a great complementer along with what we put out on this channel so hopefully this helped you out if you ran across that article had some questions hopefully this brings a bit more clarity I know there's a lot of information packed into this video watch it at half speed watch it again and hopefully kind of grind that out so thank you for joining us in this video and we'll see in the next one

Channel: Parallel Wealth

Views: 13,076

Keywords: Financial Planning, Retirement Planning, Retirement, Savings, Wealth, Parallel Wealth, cpp, cpp at 60, cpp at 65, cpp at 70, when to start cpp, inflation, inflation canada, inflation increasing, how to manage inflation

Id: lqHy2-FtGlc

Length: 8min 26sec (506 seconds)

Published: Mon Oct 24 2022