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The Canada Pension Plan – What You Should Know if You Need Debt Help in Vancouver

Wednesday, January 17, 2018

Unexpected debts arise, and being aware of your earnings after retirement can help you to plan for the future. The last thing you should do is leave everything to chance and hope the Canada Pension Plan (CPP) will take care of your needs entirely. However, many individuals approach their retirement years with this sort of strategy in mind. While changes to the plan have served numerous Canadians well, the benefits you receive later may not be enough to pay off your financial debts. Your best option is to resolve your accounts with creditors as soon as possible, so you are not left filing for bankruptcy in Vancouver as a senior.

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How the CPP May Affect You

First, you will need to know the basics of the Canada Pension Plan. Once you familiarize yourself with how the plan works, you will have a better idea of how it may impact you in your senior years.

Here is an overview of the CPP:

  • What It Is – The Canada Pension Plan is a retirement pension provided by the government. With the exception of those who live in Quebec (which has its own, similar version), all Canadians pay into this fund once they reach the age of 18. Approximately 25 percent of your retirement income is projected to be covered by this plan, while the other 75 percent should be covered by your savings, interest, and other pensions.
  • How Much to Expect The amount you receive in payouts from the CPP is directly related to how much you have earned. The more you earn over the course of your career, the more you will pay into the program. That means you will have higher payouts than if you had earned less.
  • Low-Earning Years – Although your payouts will reflect the earnings you have made for most of your adult working life, you can drop some of the years from the total average. In fact, you may eliminate eight of the years during which you made the least money overall.
  • Getting an Estimate – If you would like to see a projection of what your payouts will be, you can request this information from Service Canada. The document you would need is called a Statement of Contributions (SOC). However, you should not plan your retirement based on this statement. In the future, you could make less on average than you have thus far. This may be due to unexpected illness, job loss, early retirement, or other factors that would affect the amount for your CPP payments.
  • Deferring or Collecting Early – You will need to start collecting your pension when you are between the ages of 60 and 70. If you opt to collect before you turn 65, you will incur a monetary penalty. After you are 65, you can defer your payouts until later and receive a monetary incentive. You will need to apply 6 months in advance of the time that you wish to start receiving your benefits, so be sure to remember this when you are planning for retirement.

Seek Experienced Debt Help in Vancouver

Regardless of when you choose to retire, you will want to do so while owing as little to creditors as possible. You might include your CPP benefits in your strategy. We know that all of this may be confusing, especially when the laws change from time to time. Abakhan and Associates Inc. can provide financial advice to help you reduce your debt, so you can get the most from your retirement years.

Are you in debt or considering bankruptcy in Vancouver? Contact Abakhan & Associates Inc. for more information. Phone us at 877-308-8877, or complete our quick online contact form to reach us.

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