When planning for retirement it’s important to have at least some idea of the income you’ll be receiving. One source of income that’s often over-estimated is your Canada Pension Plan benefits, or CPP benefits.
Financial planning tools always enter the maximum CPP benefits that can be received with corresponding reductions for early payments.
The CPP maximum amount (in 2012) is $986.67 a month at age 65. However, this amount is based on contributing the maximum amount of your pensionable earnings from age 18 to age 65.
CPP Benefits: How much will you get?
The amount of your CPP benefits depends on how much, and for how long, you contributed to the plan.
To compensate for periods when you’re not in the paid labour force, such as unemployment, schooling, illness and disability, up to 15% of your low earnings periods are not counted toward CPP benefits.
Also, periods of lower earnings from staying home caring for children under the age of seven can be excluded from the calculation.
I know that I won’t receive the maximum amount of CPP benefits. I’ve had several years of unemployment, when my children were young and when I was attending school. I’ve had years of lower income from part-time work and partial years.
I’ve had very few years of earning the maximum pensionable earnings. So how much will I actually receive?
Check out Service Canada
You can access a wide range of online services related to government benefits at www.servicecanada.gc.ca. These services include EI programs, your tax information and, what I need for my purposes, CPP programs.
To register for your account you need to apply for a registration code, which is a 7-digit number that will be mailed to you. You enter your name, social insurance number and date of birth.
When I attempted to register, surprisingly, my name was not found in the system. After double checking my typing (I’ve been known to misspell my name), I was stumped. After a brain wave, I entered my maiden name – and there I was.
I received my code in the mail and I was anxious to see if there were any more errors. You first go to “Access My Service Canada Account” and follow lengthy registration instructions to create a User ID and password which is called your access key. You can then access your personal information.
CPP Contributions and Benefits
I was anxious to view my CPP Statement of Contributions and it seemed to be accurate – all my earnings history is there for all my single and married years. I was interested in checking out my estimated monthly CPP benefits.
It shows the monthly retirement pension amount you could receive if you were 65 today, if you apply at age 60 and if you wait until age 70.
Also shown are disability benefits, survivor benefits and lump sum death benefit amount.
Of course, these amounts are estimates only and they will be more accurate the closer you are to retirement as they assume the income level will remain the same.
There’s a good retirement income calculator that gives payment amounts for different scenarios, such as various retirement ages and future income projections.
I urge every Canadian to register on this site and check your information for accuracy.
What about me?
I had a lengthy conversation with a government representative about having my incorrect name on the site. I have been married for decades and have been employed and completed income taxes using my married name, so why the inconsistency now?
The representative didn’t seem to think there was any urgency to this situation – when will it become urgent…when I turn 65? – but he did give me some phone numbers to contact for more information.
In the meantime, I’m going to busy trying to find myself.