XEQT vs Taking CPP at 60, 65, or 70: The Math Behind Canada’s Biggest Retirement Decision

It was Thanksgiving weekend and my uncle Dave had cornered me in the kitchen. The turkey was still in the oven. My aunt was yelling something about the cranberry sauce. And Dave – a retired electrician from Hamilton who had never once asked me about investing – was gripping a printout from the Service Canada website like it was a ransom note.

“They’re telling me I can take CPP now at 60, but it’s less money. Or I wait and get more. How much more? They won’t tell me in plain English. I’ve been reading these forums and everybody’s got a different opinion.”

He was 59. He was stressed. And he was about to make a decision worth tens of thousands of dollars based on a Reddit thread he’d half-read on his phone.

I took the printout, sat down at the kitchen table, and we ran through the numbers together – right there, between the mashed potatoes and the dinner rolls. By the time the turkey came out, Dave had a plan.

This page is that kitchen table conversation, except with better tables and no risk of gravy stains. If you’re a Canadian approaching retirement and trying to figure out when to start CPP – and whether investing in XEQT changes the equation – this is the most important math you’ll do this decade.

Let me break it down.

1. How CPP Timing Actually Works

The Canada Pension Plan lets you choose when to start receiving payments between the ages of 60 and 70. The “standard” age is 65 – that’s the baseline everything else is calculated from.

Here’s what most Canadians don’t realize: the penalty for starting early and the bonus for delaying are not small adjustments. They are massive.

• Take CPP at 60: Your payment is reduced by 0.6% for every month before 65. That’s 60 months early, so a 36% reduction. Permanent. For life.
• Take CPP at 65: You get the standard amount. No reduction, no bonus.
• Take CPP at 70: Your payment is increased by 0.7% for every month after 65. That’s 60 months of delay, so a 42% increase. Permanent. For life.

Let me put that in dollars.

Read that last row again. The difference between starting at 60 and waiting until 70 is more than double the monthly payment. Someone receiving the average CPP goes from $512/month to $1,136/month just by waiting ten years.

That’s a $624/month difference. For the rest of your life.

But here’s the thing nobody mentions in the government pamphlets: the person who takes CPP at 60 gets paid for ten extra years before the person who waits until 70 sees a single dollar. And that head start matters.

2. The Break-Even Analysis: When Does Waiting Actually Pay Off?

This is the question that was eating my uncle Dave alive. If you take CPP early, you get smaller cheques – but you get them for longer. If you delay, you get bigger cheques – but you miss out on years of income.

At some point, the person who delayed catches up to the person who started early. That’s the break-even age.

Let’s run the numbers using the average CPP payment of $800/month at age 65.

Break-Even: Age 60 vs Age 65

The break-even point between taking CPP at 60 vs 65 is approximately age 74. If you live past 74, you would have been better off waiting until 65.

Break-Even: Age 65 vs Age 70

The break-even point between taking CPP at 65 vs 70 is approximately age 82. If you live past 82, you would have been better off delaying to 70.

But this analysis is missing something crucial. It treats every dollar the same, whether you receive it today or in ten years. It ignores the time value of money. And for anyone who plans to invest their CPP payments – say, in a low-cost, globally diversified ETF like XEQT – that changes everything.

3. The XEQT Twist: Take CPP at 60 and Invest the Difference

Here’s where things get interesting. What if, instead of just spending your early CPP payments, you take CPP at 60 and invest every dollar into XEQT inside a TFSA or taxable account?

XEQT holds over 9,000 stocks across the globe. It’s designed for long-term growth. Historically, a globally diversified equity portfolio has returned roughly 8-10% annually over long periods. Let’s use a conservative 8% average annual return for this analysis.

Scenario: Take CPP at 60, Invest in XEQT for 5 Years (Until 65)

Using the average CPP amount – $512/month starting at 60 – and investing every payment into XEQT at 8% annual growth:

By age 65, you’ve invested $30,720 of CPP payments – but thanks to compounding in XEQT, that money has grown to approximately $37,436.

Now let that portfolio keep compounding while you continue receiving your $512/month CPP:

Compare that to someone who waited until 65 for $800/month and simply spent the money as income. By age 80, the “take it early and invest” person has the ongoing CPP income plus a six-figure XEQT portfolio generating its own returns.

That XEQT portfolio is wealth the “wait until 65” person never builds.

This is the part that the basic break-even analysis misses entirely. Yes, the person who waits until 65 eventually collects more total CPP dollars. But the person who takes it at 60 and invests has a compounding asset working in the background.

If you want to understand how that compounding works over decades, I wrote a full breakdown in the XEQT retirement planning guide.

4. Scenario Comparison: All Three CPP Timing Strategies Side by Side

Let’s put all three scenarios next to each other. For each, we’ll assume the person invests any CPP payments received before age 65 into XEQT at 8% annual returns. After 65, CPP is used as income.

Using the average CPP payment ($800/month at 65):

Here’s what jumps out: the “take at 60 and invest” strategy creates a growing asset. By age 85, the XEQT portfolio alone is worth $174,400 – and that’s only from five years of investing early CPP payments. Meanwhile, CPP payments at $512/month continue.

The total wealth picture – portfolio plus cumulative CPP – makes the “take early and invest” strategy surprisingly competitive, even against the 42% bonus of delaying to 70.

But here’s where I need to be honest with you.

5. Why the Math Isn’t the Whole Story

If investing early CPP payments into XEQT looks so good on paper, why doesn’t every financial planner recommend it?

Because the market doesn’t guarantee 8% every year. That 8% is an average over decades. In any given five-year stretch, XEQT could return 15% or it could return -5%. This is called sequence of returns risk, and it hits hardest when you’re withdrawing or relying on a portfolio in retirement.

CPP, on the other hand, is a guaranteed, inflation-indexed, government-backed payment for life. You cannot outlive it. It doesn’t drop when the market crashes. It goes up with inflation every year.

6. Key Factors That Should Influence Your Decision

This is not a one-size-fits-all calculation. Here are the factors that actually matter:

Health and Family Longevity

This is the elephant in the room. If your parents lived to 90+ and you’re in good health, delaying CPP to 70 is probably the right call. You’ll blow past both break-even points and collect significantly more money over your lifetime.

If you have serious health concerns or a family history of shorter lifespans, taking CPP at 60 makes mathematical sense. You’ll collect more total dollars in the years you have.

Nobody likes thinking about this. But it’s the single biggest variable in the equation.

Other Retirement Income

Do you have a defined-benefit pension from work? A large RRSP or TFSA portfolio? Rental income?

If you have enough other income to cover your expenses from 60-70, delaying CPP is powerful. You’re effectively using your savings to “buy” a higher guaranteed income for life.

If you’re retiring at 60 with limited savings and need the income to pay bills, taking CPP early isn’t a failure – it’s a practical necessity. Don’t let anyone make you feel guilty about it.

This ties directly into the RRSP meltdown strategy, where you draw down your RRSPs between 60-70 while delaying CPP and OAS.

Tax Bracket Considerations

CPP payments are taxable income. If you’re still working at 60 and earning a good salary, taking CPP early means stacking those payments on top of employment income – and you could be paying 30-40% marginal tax on CPP dollars you don’t even need.

In that case, delaying CPP until you’re in a lower tax bracket (after you stop working) could save you thousands in taxes.

On the flip side, if you retire at 60 with low other income, taking CPP early keeps your income modest and your tax rate low.

OAS Clawback Risk

If your total income exceeds approximately $90,997 (2025 threshold), you start losing your Old Age Security payments. A higher CPP payment from delaying to 70 could push you into clawback territory – especially when combined with RRSP withdrawals, pension income, and investment returns.

For high-income retirees, taking CPP earlier at a lower amount might actually preserve more OAS, resulting in higher total government benefits.

Spouse and Survivor Benefits

When one spouse dies, the surviving spouse receives a CPP survivor’s pension – but it’s capped. If both spouses are already receiving CPP, the survivor’s combined benefit is limited to the maximum individual amount.

This means if one spouse has a generous CPP and the other doesn’t, the timing decision should be coordinated. More on this below.

7. The Spousal CPP Coordination Strategy

If you’re married or in a common-law partnership, the CPP timing decision is not individual – it’s a household decision. And most couples get this wrong because they think about it in isolation.

Here’s a strategy worth considering:

The higher-earning spouse delays CPP to 70. The lower-earning spouse takes CPP at 60.

Why? Three reasons:

1. Maximize the survivor benefit. If the higher-earning spouse dies first, the surviving lower-earning spouse inherits a larger survivor pension (based on the delayed, higher amount). This provides better financial protection for the surviving spouse.

2. Bridge income. The lower-earning spouse’s early CPP provides household income during the delay period, reducing the need to draw down savings.

3. Tax splitting. CPP pension sharing (available after age 65) lets couples split CPP income for tax purposes. By maximizing one spouse’s CPP and taking the other’s early, you create more opportunities for effective income splitting.

This is advanced retirement planning, and it connects directly to the glide path transition strategy I wrote about for couples moving from accumulation to decumulation.

8. The “Take Early and Invest” Strategy: A Realistic Assessment

I want to be fair to both sides here. Let me lay out the honest pros and cons of taking CPP at 60 and investing the payments in XEQT.

When It Works Well

• You have the discipline to actually invest the payments. This is the biggest “if.” If you take CPP at 60 and spend every dollar on vacations and a new truck, you’re just locking in a 36% lifetime reduction with nothing to show for it.
• You invest in a tax-sheltered account. If you have TFSA room, sheltering those XEQT gains from tax makes the strategy significantly more powerful.
• You’re in good health but have a family history that’s mixed. Taking early gives you the bird in the hand while the XEQT portfolio gives you growth potential.
• You’re comfortable with market volatility. If a 30% portfolio drop would cause you to panic-sell, this strategy will blow up in your face.

When It Doesn’t Work

• You’ll spend the money instead of investing it. Be honest with yourself.
• You’re in a high tax bracket at 60. You’ll give back a chunk of those early CPP payments to the CRA.
• You have strong longevity genes. If you’re likely to live to 90+, the guaranteed 42% increase from delaying to 70 is almost impossible to beat with market returns.
• You need the certainty. CPP is guaranteed. XEQT is not. If you lose sleep over market swings, the guaranteed higher payment is worth more than any spreadsheet can capture.

For anyone over 50 who’s just starting to take investing seriously, the answer often depends on how much time you have to ride out market volatility.

9. The Decision Framework

I promised my uncle Dave a clear framework, and I’ll give you one too. Ask yourself these questions in order:

Question 1: Do you need the money at 60 to cover basic living expenses?

• Yes: Take CPP at 60. Financial survival comes first.
• No: Move to Question 2.

Question 2: Are you still working and earning a high income at 60?

• Yes: Delay CPP. You don’t need it and you’ll pay too much tax on it.
• No: Move to Question 3.

Question 3: Do you have enough savings (RRSP, TFSA, pension) to bridge you from 60 to 70?

• Yes: Strongly consider delaying CPP to 70. Use savings to bridge. Consider the RRSP meltdown strategy.
• No, but I have enough to bridge to 65: Consider taking CPP at 65 as a compromise.
• No: Take CPP at 60.

Question 4: How’s your health? Family longevity?

• Excellent health, parents lived to 85+: Delay favours you.
• Health concerns or family history of shorter lifespans: Take earlier.

Question 5: Do you have a spouse to coordinate with?

• Yes: Consider the spousal coordination strategy – one delays, one takes early.
• No: Make the decision based on your own health and finances.

Question 6: Will you actually invest early CPP payments in XEQT?

• Yes, and you have the discipline and tax-sheltered room: Taking at 60 and investing is viable.
• No, or you’re not sure: Don’t base the decision on a strategy you might not follow through on.

10. How the 4% Rule Connects to Your CPP Decision

Here’s something that ties this all together. If you’re planning your retirement withdrawals using the 4% rule, your CPP timing changes how much you need in your portfolio.

Every dollar of guaranteed CPP income reduces the amount you need to withdraw from your XEQT portfolio. A higher CPP payment from delaying means a lower required portfolio withdrawal, which means your portfolio lasts longer.

Look at that last column. Delaying CPP to 70 means you need $187,200 less in your portfolio to generate the same retirement income as someone who took CPP at 60. That’s almost $200,000 less you need to save.

That’s not a small number. For many Canadians, the difference between needing $846,000 and needing $659,000 is the difference between retiring comfortably and working three more years.

11. What I Told Uncle Dave

We sat at that kitchen table for about forty minutes. The turkey got cold. My aunt was not happy.

But Dave walked away with clarity. Here’s what we landed on:

Dave was 59, in decent health (his dad lived to 88), had a modest pension from his electrician’s union, and had about $180,000 in his RRSP. His wife Carol was 57 with a smaller CPP entitlement and no pension.

The plan: Dave delays CPP to 70. He uses a combination of his union pension and RRSP withdrawals to bridge from 60 to 70, melting down the RRSP while his tax rate is low. Carol takes her CPP at 60 and they invest her early payments into XEQT in her TFSA.

This gives them:

• Bridge income from Dave’s pension and RRSP from 60-70
• Maximum CPP for Dave at 70 ($1,136+/month), which also maximizes Carol’s potential survivor benefit
• A growing XEQT portfolio from Carol’s early CPP payments
• Lower lifetime taxes by melting the RRSP before Dave’s CPP and OAS kick in

It’s not the simplest strategy. But it’s worth tens of thousands of dollars over their retirement.

Dave texts me every few months now. Last message: “Portfolio’s up 12% this year. Tell your aunt I said sorry about the turkey.”

The Bottom Line

The CPP timing decision is not just about break-even ages and spreadsheets. It’s about your health, your spouse, your savings, your tax situation, and your ability to stick to a plan.

Here’s what I know for certain:

• If you’re in good health and can afford to wait, delaying CPP is almost always worth it. The guaranteed, inflation-indexed income is one of the best “investments” available to any Canadian.
• If you take CPP early and invest in XEQT, you need iron discipline. The strategy works on paper, but only if you actually invest every payment and leave it alone for decades.
• The spousal coordination strategy is underused and powerful. If you’re part of a couple, think about CPP as a household decision, not an individual one.
• Whatever you decide, have a plan for the rest of your retirement income. CPP is one piece of the puzzle. Your XEQT portfolio, your RRSP, your TFSA, and your OAS all need to work together.

I’ve written extensively about building that complete picture in the XEQT retirement planning guide. If you haven’t read it yet, start there after this page.

And if you’re still a few decades away from this decision? Good. You have time. The best thing you can do right now is open an account, start buying XEQT, and let compounding do the heavy lifting so that by the time you’re 60, the CPP timing question is a nice problem to have – not a stressful one.

Disclosure: I may receive a referral bonus if you sign up through links on this page. I recommend Wealthsimple because I use it myself to buy XEQT – commission-free.