Weekend Reading: Free CPP Calculator Edition

One of the biggest decisions retirees face is when to take their Canada Pension Plan (CPP) benefits. There’s a case to be made for deferring CPP until age 70, or taking CPP at 60, or somewhere in between (like the standard age 65). 

You can view your estimated monthly CPP benefits online using your My Service Canada Account. But the information can be highly inaccurate. For instance, the My Service Canada estimate assumes you’ll continue earning your current salary until age 65. this can make your estimates either too high or too low, depending on your actual future earnings. 

But questions abound when other variables are introduced. Like, what happens if you retire early and have a period of five or more years with no (or low) contributions to CPP? 

For years Doug Runchey has offered a fee-for-service to help Canadians get an accurate estimate of their own CPP benefits. This business started very small but has since grown into nearly a full-time role for Mr. Runchey. He says that’s mainly because, “Service Canada is doing a terrible job of providing accurate information to many groups of people.”

Mr. Runchey has now partnered with Certified Financial Planner David Field to create a free CPP Calculator to give Canadians a simple and highly accurate way to calculate their Canada Pension Plan benefits.

“View the calculator here at www.cppcalculator.ca.”

I reached out to Mr. Runchey to get his feedback on why he (and partner David Field) created this free CPP Calculator for Canadians and what makes it different from the My Service Canada estimates.

Mr. Runchey said the free CPP calculator is different from the My Service Canada Statement of Contributions and online estimates for two main reasons, as follows:

Key Differentiators for the free CPP Calculator:

Future earnings – Our calculator uses whatever you enter for future earnings, whereas Service Canada pretends that the person is eligible for CPP in the following month, which has the same effect as projecting their average lifetime earnings through until age 65. Depending upon the person’s actual future earnings, that can make Service Canada’s estimates either too high or too low, but rarely is it accurate unless they are very close to being eligible for CPP.

Enhanced CPP changes – Our calculator includes the enhanced CPP increases for earnings in 2019 and subsequent years, whereas Service Canada’s estimates do not. This can make the Service Canada estimates far too low if the contributor will be working several years after 2019.

Variables not considered in the free CPP Calculator (or My Service Canada)

There are also other factors that neither our calculator nor the My Service Canada estimates currently deal with. It is my hope that our calculator will deal with at least some of these situations in the not-too-distant future, although for now they still require my full-service calculations, as follows:

Child-rearing dropout  (CRDO) – Neither our calculations nor Service Canada’s estimates include the CRDO. This makes both of our results too low for anyone who can claim the CRDO. This is possibly our highest priority for improving our free calculator.

Post-retirement benefits (PRBs) – Neither our calculations nor Service Canada’s estimates consider the value of PRBs. This doesn’t affect the amount of the regular retirement pension calculations, but it does affect the breakeven analysis.

Combined retirement/survivor’s benefits – Neither our calculations nor Service Canada’s estimates consider the impact of the combined benefit calculations rules. These are quite complex and might never be part of our online calculator. They will remain part of my full-service business though, and they may transition to David’s business line at some point in the future.

CPP disability – Neither our calculations nor Service Canada’s estimates consider the impact of someone previously or presently receiving a CPP disability pension. We hope to include this in some future version of our calculator.

Mr. Runchey hopes the free CPP calculator will succeed so that he can begin to transition to semi-retirement again, and yet hopefully still enjoy an income from CPP calculations.

“Our CPP calculator is presently free, but hopefully once we get it fully up and running, we can start charging enough to cover expenses and realize a bit of profit from it. I have been told that my current full-service fees are quite low, but the eventual fees for our online calculator should likely be considerably lower.”

You can get an accurate CPP estimate using the free CPP Calculator here. For more complicated situations, I highly recommend reaching out to Doug directly for a full-service and personalized CPP estimate (including multiple scenarios and calculations).

This Week(s) Recap

I wrote the following posts over the past two weeks:

My wife’s trusty navigation helped me get over my anxiety about driving in another country. If you’re anxious about managing or investing your money, maybe you need a financial navigator.

This one’s for the anti-RRSP crowd – why RRSPs are not a government tax scam.

Credit card balance protection, mortgage life insurance, and other big financial rip-offs to avoid.

Over on the Young & Thrifty blog I wrote about the best GIC rates in Canada.

I also explained how to transfer a credit card balance wisely.

Weekend Reading:

Our friends at Credit Card Genius always have the most up-to-date list of the best credit card offers, sign-up bonuses, and deals of the month.

Want to know what’s happening with the Aeroplan loyalty program now that Air Canada is set to launch its own program later this year? The Prince of Travel has got you covered in this informative video:

From a former ad-man, why Wealthsimple and Questrade are winning the ad war this RRSP season.

Some index-embracing investors feel the need to ‘graduate’ their portfolio from TD e-Series funds to a lower cost portfolio of ETFs. Michael James explains the trade-offs of switching portfolios.

Des Odjick says the most damaging thing you can do for your money is believe that you’re bad at money.

Behavioural economist Shlomo Benartzi how digital design is helping to drive consumer behaviour.

Nick Maggiulli goes after the FIRE crowd’s cost cutting obsession, calling it the biggest lie in personal finance.

“But none of these things are the actual reason for how they retired early.  Because the actual reason is either (1) earning a high income or (2) having an absurdly low level of spending, or both.”

On the flip side, Rob Carrick says it’s time to stop acting like retirement past age 65 is a failure.

An incredibly thought-provoking post by Lawrence Yeo, who says money is the megaphone of identity.

Millionaire Teacher Andrew Hallam wonders if you’ll be ready when stocks lose big.

Mr. Hallam also explained why strategies for happiness boost success and life expectancy.

Speaking of life expectancy, scientists are close to extending a human’s ‘healthy lifespan’. What would you do with 20 extra years?

Four Pillar Freedom breaks down the biggest misunderstanding about compound interest:

“Compound interest actually sucks early on. The magic only arrives in the later years.”

PWL Capital’s Ben Felix digs into the concept of socially responsible investing in his latest Common Sense Investing video:

Some great examples of retirement income and withdrawal strategies to keep more money in your pocket.

A question I hope to be able to answer for myself soon: I’ve maxed out my TFSA and RRSP. Now what?

Canadians used to live in a country that built housing with everyone in mind. What happened?

One answer could be here – How much does homeownership really cost?

Finally, the brilliant Morgan Housel explains why ‘easy’ comes in different flavours.

Have a great weekend, everyone!

Weekend Reading: Free CPP Calculator Edition

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13 Comments

  1. DJ on February 8, 2020 at 10:58 am

    Hi Robb

    I’m interested in the CPP Calculator but concerned about identity theft because of the download from Service Canada, as it accesses personal tax history – what about name, address, and SIN? Do you know much about the company offering this? Are they reputable? (I have not submitted email to access yet due to this concern).

    Any more info you can offer is greatly appreciated!

    • David Field on February 8, 2020 at 11:54 am

      Hello DJ,

      We share your concerns. The information extracted from the HTML version of the CPP Statement does not have your SIN or Address. The Calculator will pull your full name, month of birth, year of birth, and all the Unadjusted Pensionable Earnings data from the statement. Nothing else.

      Alternatively, you can manually enter the data. It requires your full name, month of birth, year of birth and all your Unadjusted Pensionable Earnings in order to provide a comprehensive and accurate benefit calculation.

      The CPP Calculator has been designed in a way so that we are not storing any of your sensitive information. The unique web address we send after registering is just for access. Nothing is stored or linked to your account. It is because of this that you cannot save your reports and have to hit the back button to run other scenarios. This was done specifically because we did not want to retain your information. Your privacy is a really big concern to us.

      Also, we require registration because Doug and I run small businesses and cannot afford to have bad traffic/actors trying to crash our site since the calculator does thousands of calculations for every report generated.

      I hope you’ll give it a try and we welcome any feedback to try to improve the tool.

      Thanks DJ,

      Dave

  2. Kurt on February 8, 2020 at 1:37 pm

    This CPP Calculator won’t help me figure out the effect of retiring at 55 and if deferred payments will start going down instead of up at 63 (8 years dropped out). There is a Youtube blogger that says deferred payments will keep going up not down but I think she’s wrong?

    • David Field on February 8, 2020 at 2:04 pm

      Hello Kurt,

      This CPP Calculator (www.cppcalculator.ca) will help you figure out the effect of retiring at 55. The calculator will show you your benefit amounts at start ages from 60 to 70 (all results are in today’s dollars). Depending whether you started working at age 18 or started after post-secondary may add more low contribution years to your personal calculation. Retiring at age 55 will add at least another 5 years of zeros (more if you start your benefit after 60). How much your benefit will go up from delaying your benefit start will depend completely on your CPP contribution history. This is what the CPP Calculator helps you with. It may not be worth waiting if the increase is insignificant. When it comes to CPP there is no cookie cutter answer, it completely depends on your contributions over 47 years.

  3. Michael James on February 8, 2020 at 3:35 pm

    I can’t get the calculator to work. If I go to enter the figures manually but don’t actually change any of the numbers it produces a report. As soon as I edit any of the manually-entered numbers and try to generate a report, I get the error message “We’re sorry, but something went wrong. If you are the application owner check the logs for more information.”

    • Robb Engen on February 8, 2020 at 4:05 pm

      Hi Michael, I get the same error message. I was able to run a calculation showing my CPP benefit if I stopped contributing today (zeroes for 41-70), but when I tried to enter max contributions from 41-50 I got the error message.

  4. Robb Engen on February 8, 2020 at 3:55 pm

    Uh-oh, do we have another case of Boomer & Echo readers breaking a retirement calculator?

    Call it the online calculator stress-test!

  5. DaveG on February 8, 2020 at 6:13 pm

    Calculator worked well. It successfully read in my CPP statement and I then manually added 2019 and 2020 max amounts. Retiring this year at 60 and looks like I’ll get $30 less than the monthly max at 65, but probably going to defer to 70. Pretty much confirmed what I already estimated.
    Not as useful for calculating my wife’s CPP since child rearing drop-out years are not yet supported, but hopefully in version 2.0. That’s currently the biggest wild card for us, as I don’t really have a good estimate.
    Thanks for posting Robb. Good program! Might actually get in touch with David at some point this year to discuss a retirement plan! 🙂 Cheers!

    • Doug Runchey on February 8, 2020 at 7:15 pm

      Hi Dave G – If you want to know your wife’s actual CPP amounts with the child-rearing dropout (CRDO) I can do those calculations as part of my full-service business. My fee is as little as $30 if you just want one calculation or $90 if you want to see 6 choices. If you’re interested, email me at DRpensions@shaw.ca or check out my website at http://www.drpensions.ca/index.html

  6. Pat on February 9, 2020 at 6:44 am

    Those were my thoughts too. I’m not about to give away personal information like that for a calculator that may or may not be accurate.

  7. Doug Runchey on February 9, 2020 at 10:28 am

    My apologies to anyone who is having problems with using the CPP calculator. I promise that it worked flawlessly throughout the testing that we did, but obviously its having some difficulties handling the volume of business that it is receiving right now, partly as a result of this article. Unfortunately, we may not be able to fix these problems immediately, because David (who is our programmer) is away for a few days.
    I further promise that this was not part of our marketing strategy, but if anyone who is having difficulties with using our online calculator wants to to use my full-service CPP calculation services, I will offer 50% off my regular fees until we can get those problems with the online calculator fixed. Just mention this offer when you email me at DRpensions@shaw.ca

    • Robb Engen on February 9, 2020 at 10:40 am

      Hi Doug, thanks so much for the kind offer. Hopefully you can get the bugs worked out. These things happen. Thanks for providing such a valuable service for Canadians!

  8. Potato on February 10, 2020 at 6:25 am

    There’s also the spreadsheet-based CPP calculator here if the new one is having issues. It rounds to years rather than months, but no registration required.

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