Retirement doesn’t always mean stopping work entirely. Many Canadians choose to keep working while receiving their Canada Pension Plan (CPP) retirement pension, whether for financial security, personal fulfillment, or to ease into full retirement. But how does working affect your CPP benefits, and what strategies can you use to maximize your income while still contributing to your future?
Table of Contents
In this guide, we’ll break down everything you need to know about working while collecting CPP, including post-retirement contributions, tax implications, and how to boost your pension income for life.
📅 When Can You Start Receiving Your CPP Retirement Pension?
The standard age to start receiving CPP retirement benefits is 65, but you have the flexibility to start as early as 60 or delay it until 70. Your choice significantly impacts your monthly payments:
✔️ Taking CPP Early (Age 60-64):
- Payments are reduced by 0.6% per month before age 65.
- If you start at age 60, you receive 36% less than if you had waited until 65.
✔️ Starting at 65 (Standard Age):
- You receive your full CPP pension based on your contributions.
✔️ Delaying CPP (Age 66-70):
- Your payments increase by 0.7% per month after 65.
- Waiting until age 70 means your pension increases by 42% compared to taking it at 65.
💡 Key Takeaway: If you plan to work past 60, delaying your CPP can be a smart strategy to maximize your monthly retirement income in later years.
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💼 Can You Work While Receiving CPP?
Yes! You can work and earn income while receiving your CPP pension, and your pension payments will not be reduced.
However, if you’re under 70, you may still need to contribute to CPP, which can actually work in your favor by increasing your benefits through the CPP Post-Retirement Benefit (PRB).
📈 What Is the CPP Post-Retirement Benefit (PRB) & How Does It Work?
The CPP Post-Retirement Benefit (PRB) is an extra pension amount that you earn if you continue working and contributing to CPP while receiving benefits.
✔️ Under Age 70:
- If you work while receiving CPP and are under 70, you must continue making CPP contributions.
- Each year you contribute adds to your PRB, increasing your monthly pension for life.
- Your PRB is automatically calculated and added to your CPP payments the following year.
✔️ Aged 65 to 70:
- At 65, you can choose to stop contributing to CPP by filling out the CPT30 form.
- If you continue working and contributing, you’ll keep earning PRB increases every year.
✔️ Age 70 & Beyond:
- Once you turn 70, CPP contributions automatically stop, even if you’re still working.
💡 Why the PRB Matters:
The CPP Post-Retirement Benefit is a great way to increase your lifetime pension payments—especially if you retire gradually or continue earning an income into your later years.
💰 How Working While on CPP Affects Your Income & Taxes
If you’re earning income while receiving CPP payments, it’s important to understand the tax implications and how to strategically manage your earnings.
1️⃣ CPP Payments Are Taxable
✔️ Your CPP pension is considered taxable income.
✔️ The more you earn from working, the higher your total taxable income will be.
2️⃣ Avoiding OAS Clawback (Old Age Security Recovery Tax)
✔️ If your total income exceeds $90,997 (for 2024), your OAS benefits will start being reduced (clawed back).
✔️ If you plan to keep working, consider delaying CPP & OAS to minimize taxes.
3️⃣ RRSP & TFSA Planning
✔️ If you’re working while receiving CPP, you can use an RRSP to reduce taxable income.
✔️ A TFSA is great for tax-free savings, especially if you expect to earn a higher income in retirement.
💡 Key Strategy: Consider RRSP withdrawals before collecting CPP to even out your taxable income over time and reduce overall taxes.
🔍 Should You Continue CPP Contributions While Working?
When you reach age 65, you have the option to stop contributing to CPP (by filling out Form CPT30). Here’s how to decide:
✔️ Continue Contributing If:
- You want to increase your pension benefits through the PRB.
- You’re still earning a significant income and want higher CPP payouts later.
✔️ Stop Contributing If:
- You no longer need additional pension income.
- You want to reduce payroll deductions from your paycheck.
💡 Expert Tip: If you’re self-employed, you pay both employer and employee CPP contributions—so stopping at 65 may be a good choice to reduce taxable deductions.
📊 Key Considerations for Working While on CPP
Before deciding whether to work while collecting CPP, consider:
✔️ Your Health & Lifestyle Goals – Do you want to slowly transition into retirement or stop working completely?
✔️ Your Financial Needs – Will continuing to work provide extra financial security or allow you to save more for later?
✔️ Tax Efficiency – Are you minimizing taxes by using RRSPs, TFSAs, and other tax-efficient strategies?
✔️ OAS Clawback Risks – If you expect to earn above $90,997, plan accordingly to reduce OAS clawbacks.
📢 Final Thoughts: How to Maximize Your CPP While Working
💡 Key Takeaways:
✔️ You can work while collecting CPP without reducing your pension.
✔️ If you’re under 70, you must continue contributing, which adds to your PRB.
✔️ You can choose to stop contributions at 65 by filing Form CPT30.
✔️ Continuing to work while on CPP may result in higher taxable income—plan wisely to avoid OAS clawbacks.
✔️ Consider delaying CPP to increase monthly benefits by up to 42%.
📌 Next Steps:
To optimize your retirement income while working, it’s best to have a personalized financial strategy. Book a consultation with a financial planner to:
✅ Analyze your CPP & tax situation
✅ Create a tax-efficient income plan
✅ Maximize your retirement savings while working
🚀 Make the most of your retirement—start planning today!