Retirement planning is one of the biggest financial decisions Canadians face, and one question often comes up: Should I retire at 60? While age 65 is the standard for receiving full Canada Pension Plan (CPP) benefits, many Canadians consider retiring earlier.
In this post, we’ll break down the pros and cons of early retirement, the impact on your CPP payments, and help you figure out the all-important CPP break-even point — the age where retiring early or later evens out in terms of total income.
🧾 What Is the Canada Pension Plan (CPP)?
The Canada Pension Plan is a monthly, taxable benefit designed to replace part of your income when you retire. You can start receiving CPP payments as early as age 60, or delay until age 70, with adjustments based on when you start.
Here’s what you need to know:
- Standard starting age: 65
- Earliest possible: Age 60, but with a permanent reduction
- Reduction rate: 0.6% for every month before 65 (7.2% per year)
- At 60: You receive 36% less than you would at 65 — for life
💰 CPP Payment Example (2025 Estimates)
| Age You Start CPP | Monthly Payment (Max Est.) | Annual Amount | Reduction/Adjustment |
|---|---|---|---|
| 60 | ~$810 | ~$9,720 | -36% |
| 65 | ~$1,265 | ~$15,180 | Standard |
These numbers are based on receiving the maximum CPP. Most Canadians receive less, depending on their contributions.
📈 The CPP Break-Even Point
So, is it smarter to take a reduced payment early or wait for the full amount?
The break-even point is the age at which the total income you receive from taking CPP at 60 equals the amount you’d receive by waiting until 65.
Break-even age: ~74–75 years old
Let’s say:
- You take CPP at 60: You receive $9,720/year for 15 years by age 75
- You take CPP at 65: You receive $15,180/year for 10 years by age 75
Around age 74 or 75, the total income is about equal. If you live longer than that, waiting until 65 pays off more in the long run.
✅ Pros of Retiring at 60
- More freedom while you’re younger
- Enjoy time and travel while you’re active
- You may have other income sources (RRSPs, TFSA, employer pension)
- Potential mental and physical health benefits
❌ Cons of Retiring at 60
- CPP reduced by 36% permanently
- Longer retirement period = more savings needed
- May affect eligibility for OAS/GIS later
- Employer health benefits may end early
🔍 Questions to Ask Yourself
Before you decide, consider:
- Do I have enough savings or passive income?
- Am I debt-free or close to it?
- How is my health and family longevity?
- Will I qualify for full OAS or GIS?
- Would part-time work be an option?
✅ Summary Table
| Decision | Best if… |
|---|---|
| Retire at 60 | You’re financially prepared and want early freedom |
| Retire at 65 | You rely on CPP and expect to live a long life |
| Break-even age | Around 74–75 years old |
🧠 Final Thoughts
Retiring at 60 can be a great option for Canadians who are financially ready and want to make the most of their active years. Just be mindful of the 36% reduction in CPP and make sure your other resources can carry you through a potentially longer retirement.
If you’re not sure, try the official CPP calculator or speak with a financial advisor.