An Easy Way To Estimate Your CPP Benefits

Raise your hand if you’ve spent any time thinking about what kind of money you’re likely to get from the government when you retire.

Now raise your hand if you don’t really know how much money that will be, or how to figure it out.

…twenty-seven…twenty-eight…twenty-nine…almost everyone, then.

How To Estimate Your CPP Benefits

A brief primer on the Canada Pension Plan, for those of you who – like so, so many Canadians – don’t spend hours at a time lurking around government websites for fun: created in 1966, the CPP is an earnings-based defined benefit plan that guarantees a fixed percentage of employment earnings (below a maximum cap) averaged over your working life and payable in retirement, starting as early as age 60 or as late as age 70.

Aside: it’s become quite fashionable to poo-poo the Canada Pension Plan as an unsustainable relic of Pearson-era governmental largesse, but ignoring it as a source of potential income in retirement – unless it spurs you on to save enough to replace it yourself without eating tuna-fish out of a can for the rest of your life – is foolish. So cut it out.

Related: Is Our Old Age Security Program Sustainable?

If you wait until after age 65 to apply for your pension, the annual amount you’re entitled to receive is increased. If you apply for CPP before age 65, the annual amount is decreased. That’s a gross oversimplification, and my apologies to those of you in the room for whom this is old news.

Your Unique CPP Calculation

I like to think of the CPP calculation as a recipe that never comes out the same way twice, because the ingredients – while similar – are always slightly different.  The amount you make every year, the time you took away from work to raise young children, the age you stop working full time, when you decide you take your pension, and whether you take part time work for a while in retirement or sit on the porch reading books all day are all ingredients that go into your CPP mix.

The bad news is that you need a very (and I mean VERY) firm grasp on the various calculations that make up your entitlement in order to predict what amount of money will hit your bank account when you claim your pension.

Related: 5 Misconceptions About Retirement Planning

The good news is that the government is doing that calculation for you on an ongoing basis (for some of you the fact that it’s all in the government’s hands is decidedly not good news, but we can’t all be survivalists, wrestling bears and growing great big bushy beards while living off the land in the wilds of Alberta). This means that – for good or ill – you can find out how much money the government would give you today, if you were already eligible to receive CPP.

Your Statement of Contributions

This information is available on your Canada Pension Plan Statement of Contribution (which those in the know refer to as “The SOC”, except whenever I say “The SOC”, I feel like I’m in a spy-themed episode of Sesame Street).

You can get your SOC (snigger) by logging into your My Service Canada Account, which – if you’ve had an active Employment Insurance claim recently, or bank online with BMO, TD Canada Trust, Scotiabank, or Choice Rewards MasterCard – is immediate.  If you’re one of the poor chumps who bank with CIBC, or haven’t claimed EI in the past few years, you’ll have to register for a GCKey instead.

If you’re more into transmitting your personal information by mail instead of electrons, you can request a paper copy of your SOC (hee!) sent to you by calling 877.454.4051, or by printing out an Application for a Statement of Contributions from the Service Canada Website.

Now, a caveat: while the information available to you on your CPP Statement of Contributions is technically accurate, it isn’t practically accurate.  The payment listed on the statement is from the standard recipe, right off of the box, and – while an accurate reflection of your actual pensionable earnings – doesn’t factor in any of the handful of variables that might affect the amount you’re entitled to receive.

The statement also assumes that you’re 65 today, which means that later years of higher or lower income that will affect the average lifetime earnings upon which your pension is based aren’t taken into consideration.

The Canadian Retirement Income Calculator is a great place to start if you want to explore how changes to your future earnings or the date you start receiving your pension might affect the amount of money you receive, but (another caveat), it hasn’t been updated to include the new Child Rearing Drop Out Provision.

To sum up: the Statement of Contributions is more accurate than just guessing, and less accurate than the real calculation. Helpful, eh?

Sandi Martin is an ex-banker who left the dark side to start Spring Personal Finance, a one woman fee only financial planning practice based in Gravenhurst, Ontario.  She and her husband have three kids under five, none of whom are learning the words to “Fidelity Fiduciary Bank” quickly enough.  She takes her clients seriously, but not much else.

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  1. Jane Savers @ Solving The Money Puzzle on September 13, 2013 at 8:06 am

    I was lucky enough to be able to stay home with my sons for about 12 years and I am pleased to know that I will receive some CPP consideration for those years.

    I was earning a low income for a lot of years and I now gross 50K per year so my government pension will be very modest. It will be a very important part of my retirement income.

    • Sandi Martin on September 13, 2013 at 9:16 am

      I know, that Child Rearing Drop Out is a great addition to the calculation, eh?

  2. Kathy waite on September 13, 2013 at 8:50 am

    Great article thanks Sandi,a client of mine who called that number recently said they gave him the figures at 60 and 65 over the telephone then mailed it to him.
    Kathy Waite Eureka Investor Guidance

  3. Sandi Martin on September 13, 2013 at 9:16 am

    Thanks, Kathy, that’s good to know. When in doubt, pick up the phone!

  4. Robert on September 13, 2013 at 12:08 pm

    Actually Sandy, there is a benefit estimate available in the same Service Canada website without even looking at the statement of contributions. They have a selection called “View my estimated monthly CPP benefits” which tells you how much you would get if you were 65 today. If you are over 60 it tells you how much you can get starting next month. These are useful estimates for planning.

    Certainly, as you pointed out, there are many factors that will affect the actual amount once a person applies. In general, the farther off that date is, the more influence the adjustments will have.

    • Sandi on September 13, 2013 at 12:21 pm

      Thanks Robert. It’s the money-nerd in me that likes to see the list of contributions since I was 18. I’ll grant that it’s not everyone’s cup of tea 🙂

      • Echo on September 13, 2013 at 1:28 pm

        It was nice to see that I contributed $38.69 to CPP in 1998. Well done, 19-year old me.

        Wouldn’t it also be nice to see a statement of the stupid things you blew your money on in 1998? That 3-disc changer was worth every penny!

        • Sandi Martin on September 13, 2013 at 1:32 pm


          I WIN!!

          (I spent every penny at McDonald’s)

          Also: How are we the same age? I imagined you to be a wise old sage, and now I see you’re just a young’un.

          • Boomer on September 13, 2013 at 4:41 pm

            What a couple of slackers 🙂
            My contribution when I was 18 was $56.54 back when the minimum wage was 35 cents.

          • Echo on September 13, 2013 at 7:42 pm

            I have the grey hairs of a wise old sage.

  5. Sandi on September 13, 2013 at 6:21 pm

    Oh, man. And here I was all proud of myself.

  6. Be'en on September 14, 2013 at 1:16 am

    When we immigrated to Canada in 1994, our son was only 2 years old. My wife decided to stay home to look after him and our daughter who was 7 then.

    My wife joined the workforce in 1998 (I think). Can she qualify for *Child Rearing Drop Out*? How do you apply for that?


    • Sandi Martin on September 14, 2013 at 4:54 am

      That’s a tough one, and I’d direct you to just call Service Canada and ask. Also: if you or your wife worked in a country with a pension agreement with Canada, the pension credits you have in that country might be eligible to be added to your CPP entitlement.

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