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“The best time to take my CPP/QPP is at age 60.”

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“I’m taking my QPP at 60 — that’s what’s most worth it.” Here’s how to respond to this common misconception.

Taking the QPP at 60: A Good Idea for Everyone?

In Quebec, every worker is entitled to a retirement pension paid by the Québec Pension Plan (QPP). Although benefits can be claimed as early as age 60, this option isn’t necessarily the most advantageous for everyone. Many people say, “I might as well take it now it’s money I’ve earned.” However, this decision should be made carefully, as it has lasting effects on your income for the rest of your life.

A Permanent Reduction to Consider

Claiming your QPP at 60 results in a permanent reduction of your monthly payment. For each month you take your pension before age 65, the amount is reduced by 0.6%. Therefore, applying at 60 means a 36% reduction from what you would have received at 65. This reduction lasts for life. If you live a long time, this decision can amount to a loss of tens of thousands of dollars over the course of your retirement.

The Cost of Underestimating Longevity

Life expectancy in Quebec continues to rise. A healthy 60-year-old can expect to live to 85 or even 90. Delaying your pension to 65 or even 70 not only provides a higher monthly amount but also helps better cover your needs at an older age when health care and support expenses often increase.

And What If You Delay It?

Unlike the reduction applied before age 65, the QPP offers an increase of 0.7% per month for each month you defer your pension after 65. This can result in a 42% increase in your monthly payment at age 70. For people who don’t have an immediate need for the money and have a reasonable life expectancy, waiting can be the more profitable choice.

The Break-Even Point: An Important Calculation

The break-even point is the age at which the total cumulative benefits received at a given start age equal those you would have received by choosing another option. In general, this point occurs around age 74–75. In other words, if you live beyond that age, you’ll receive more by having waited than by taking your QPP at 60.

Possible Exceptions

There are situations where taking the QPP at 60 can make sense: if your health is fragile, if you’ve lost your job and have no other sources of income, or if you have a shortened life expectancy for known medical reasons.

However, these cases are the exception, not the rule. In all cases, the decision should be based on a broader financial plan that takes into account your assets, other income sources (RRSP, TFSA, employer pension plans), tax situation, and personal goals.

An Irreversible Decision

What’s most important to understand is that this decision is irreversible. Once you start receiving your QPP, you can’t go back. It will affect your retirement income for the rest of your life. That’s why it’s strongly recommended to consult a financial advisor or planner before applying.

In conclusion

Applying for QPP at 60 isn’t automatically a bad decision. But believing it’s always the best option simply because you’re eligible is a limited view. Every situation is different, and a personalized assessment is essential to maximize the benefits of this program throughout your retirement.

Sources :

  • Retraite Québec. “At What Age Should You Apply for Your Québec Pension Plan Retirement Pension?”
    https://www.rrq.gouv.qc.ca/fr/retraite/rrq/Pages/age_retraite.aspx
  • Retraite Québec. “When Age Makes All the Difference”
    https://www.retraitequebec.gouv.qc.ca/fr/tout-simplement/Pages/quand-age-fait-toute-la-difference.aspx
  • Retraite Québec. “Calculation of Your Retirement Pension”
    https://www.rrq.gouv.qc.ca/fr/retraite/rrq/calcul_rente/Pages/calcul_rente.aspx
  • Conseils Retraite. “At What Age Should You Apply for Your Retirement Benefits (QPP, OAS)?” https://conseilsretraite.ca/age-prestation-retraite/
  • Journal de Montréal. “Claim Your QPP Pension at 60 or Wait?”
    » https://www.journaldemontreal.com/2024/08/15/demander-sa-rente-de-rrq-a-60-ans-ou-attendre