This Small Mistake Is Costing The Average Canadian $100,000
This Small Mistake Is Costing The Average Canadian $100,000
Don’t Let This Slip-Up Rob You of $100,000!
I just read an article in The Globe and Mail about a startling new survey that found the vast majority of Canadians begin to take payments from their Canada Pension Plan (CPP) as early as age 60, even though it’s usually a lot better financially to defer those payments until much later, like age 70. I found this trend to be quite shocking, since traditional retirement knowledge, along with what I have experienced in my own practice frequently suggests that deferring Old Age Security (OAS) and CPP payments as long as possible until age 70 tends to maximize your payouts from CPP and OAS and optimize your retirement plans.
When you combine this finding with the fact that Canadians are living longer — in some cases well into their 90’s, it would seem to me that Canadians by and large are not getting proper advice or they are not getting proper financial projections done prior to making this decision.
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The article goes on to state that “ Of the 946 people who responded to the survey, 34 per cent took their CPP benefits at the age of 60, 19 per cent at 65 and 16 per cent at 70. The number of people who took it at ages other than 60, 65 and 70 ranged from 4 per cent to 8 per cent. The early-taker results were roughly in line with Statistics Canada data provided to the Globe showing that, as of September, 2023, almost 40 per cent of Canadians born between 1940 and 1950 started taking their CPP benefits at 60.”
Taking CPP Early Can Be Expensive
In fact a 2020 report from Toronto Metropolitan University’s National Institute on Ageing and the FP Canada Research Foundation, shows that
by opting to start collecting the Canada Pension Plan (CPP) at 60 instead of waiting until 70, the typical Canadian can lose over $100,000 of “secure, worry-free retirement income that lasts for life and keeps up with inflation.”
So If Taking CPP Early Is So Bad, Why Do Canadians Do It?
Canadians often choose to take their Canada Pension Plan (CPP) early for several reasons, despite the potential drawbacks. Some may opt for early CPP benefits due to immediate financial needs or uncertainties about their future health and longevity. Others may prioritize enjoying retirement earlier or prefer having more control over their finances by accessing CPP funds sooner. Additionally, some individuals may not fully understand the long-term financial implications of taking CPP early, especially regarding the significant reduction in benefits compared to waiting until later ages. Overall, the decision to take CPP early can vary based on individual circumstances, preferences, and financial literacy levels.
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BACK TO THE ARTICLE!
Small Investment — Huge Return
If you are a loyal reader of my content, you would know I am a huge advocate of making small investments of time and or money that can have the potential for significant payoffs over time. Undertaking a retirement projection is a prime example of this concept.
Investing a VERY small amount of time consulting with a portfolio manager, or investment advisor, coupled with conducting a thorough financial projection, can yield significant financial benefits in the long run. By making informed decisions with professional guidance, you can potentially save tens of thousands of dollars and help secure your financial future. In this particular case, as the 2020 report shows, it can be upwards of $100,000 dollars.
Let’s ask the question another way…
If you could possibly be paid an extra $100,000 over your lifetime, and all you had to do was complete a financial projection on your retirement, would you do it?
I would think most people would say yes.
The Bottom Line
Planning for retirement is critical in helping secure your financial future. Whether it’s seeking advice from experts, doing retirement projections, or investing a little time and effort, every bit helps. By making informed choices now, you can set yourself up for a comfortable retirement later on. So, start planning today to enjoy a worry-free tomorrow.
Did you know that navigating the uncertainties of the markets and your finances is generally smoother with the support of an investment advisor or portfolio manager? Studies consistently reveal that individuals who work with investment advisors and portfolio managers tend to have up to three times higher net worth on average, but that’s not all, there’s a significant impact on overall well-being, with those who seek professional advice exhibiting higher levels of happiness and lower anxiety. Having a guiding hand through the financial landscape proves beneficial not only in terms of monetary outcomes but also in fostering a sense of security and contentment, making the challenges of an uncertain year more manageable with professional assistance.
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However, unraveling the mystery of locating a trustworthy fiduciary advisor proves to be a perplexing task for many. A quick look at common Google searches related to the topic unveils a sense of urgency and a quest for guidance. Phrases like “Fiduciary financial advisors near me,” “Best fiduciary financial advisor,” and “Financial investment advisors near me” are entered into search engines hundreds of times daily, showcasing the widespread need for assistance in finding reliable fiduciary guidance.
Have Questions? Contact us!
We’ve assisted our clients through every stage of life. Even when you’re not aware that something might impact your financial future, it likely will to some extent. Engaging in a conversation with your investment advisor about any financial changes is an excellent approach to keeping your financial goals in focus.
We have expertise in cross-border wealth management for Canadians and US Residents. Don’t hesitate to reach out to us — we’re committed to providing tailored solutions for your cross-border financial needs.
For more information or to connect with me, you can reach out via email at macekadmin@iaprivatewealth.ca or get to know me better by exploring my engaging video content on YouTube
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Joe A. Macek, FMA, CIM, DMS, FCSI
Investment Advisor, Portfolio Manager
iA Private Wealth
Toll Free North America: 1–888–324–4259
Email: macekadmin@iaprivatewealth.ca
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This information has been prepared by Joe Macek who is an Investment Advisor Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor Portfolio Manager can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
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