Why You Might Consider Claiming CPP Benefits at Age 60

The Canada Revenue Agency (CRA) administers several essential retirement benefits for individuals aged 65 and above. Among them, Old Age Security (OAS) and Guaranteed Income Supplement (GIS) are available automatically to low- and middle-income Canadians and are funded through general taxation.

In contrast, the Canada Pension Plan (CPP) is supported by direct contributions from employment or self-employment income over your career.

Common CPP Myths Debunked

One prevalent misunderstanding is that CPP benefits can only be claimed after full retirement. In truth, you can begin receiving CPP payments as early as age 60, regardless of whether you stop working or continue employment.

If you’re still employed, CPP contributions are mandatory until you reach 65. These contributions enhance your post-retirement benefits, adding to your future monthly income. After turning 65, you may opt out of CPP contributions, though continuing can further boost your retirement income.

When to Start CPP at Age 60: Situational Insights

1. Facing Unemployment

If you are not working and require funds, applying for CPP at age 60 is a viable option. The CRA will assess your benefits based on your highest-earning 39 years.

2. Business Owners with Dividend Income

CPP deductions apply only to employment and business income, not dividends. If you’ve mostly received dividend payouts, your CPP entitlement may be minimal. In such scenarios, waiting until age 70 may not be beneficial, and collecting CPP earlier could be more strategic.

3. Single Individuals with Shorter Life Expectancy

If you’re single and have a lower life expectancy, there may be no advantage in delaying CPP. Notably, CPP continues only during your lifetime. Surviving spouses or partners over 65 may receive 60% of your CPP if they aren’t already receiving CPP themselves.

Leveraging TFSA for Tax-Free Retirement Income

Unlike CPP, investment income is not subject to CPP deductions. Utilizing your Tax-Free Savings Account (TFSA) allows you to generate tax-free passive income that won’t impact your OAS eligibility. The CRA applies a clawback on OAS if your taxable income exceeds a specific limit—but TFSA withdrawals are not taxable.

To build TFSA income:

• Start early
• Focus on dividend-paying stocks
• Use Dividend Reinvestment Plans (DRIPs) to maximize compounding

A Strong Pick: goeasy (TSX:GSY)

goeasy, a Canadian non-prime lender, offers a compelling investment opportunity due to its impressive 20%–30% annual dividend growth. The company rewards shareholders through dividends and share buybacks, reducing share count and increasing dividends per share over time.

Despite a pause in dividend growth post-2008–09 financial crisis, goeasy rebounded with a stronger risk control model. Its resilience and consistent performance make it an excellent long-term investment.

Sample Investment Outlook

• $10,000 investment = 49 shares
• Current dividend (2025): $5.84/share = $286.16 annually
• In 10 years (assuming 20% annual growth): approx. $1,476 per year

This dividend income could be reinvested in other blue-chip dividend stocks like Canadian Natural Resources, further enhancing your TFSA passive income stream.

The path to a secure retirement in Canada involves strategic decisions about when to claim benefits and how to optimize your income streams.

By understanding CPP eligibility at age 60, maintaining flexibility with employment, and investing wisely through your TFSA, you can significantly enhance your financial well-being.

Consider adding high-growth dividend stocks like goeasy to your portfolio for long-term income potential—while enjoying tax benefits and protecting your OAS eligibility.

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