The maximum CPP retirement benefit for 2023 is $1,306.57 per month, however, most Canadians will receive less than the maximum amount. You can check your Statement of Contributions to see an estimate of your CPP entitlement based on your contributions to the plan. You can also use the CPP Retirement Pension Calculator on the Government of Canada website to get an idea of how much you can expect to receive in retirement.

The age you elect to take CPP dictates your penalty or your bonus. If you take CPP at age 60, you will be penalized 0.60% every month you take CPP early. That equates to a 36% penalty if you take CPP at age 60.

Alternatively, if you elect to take CPP benefits at age 70, you receive a bonus of 0.70% per month or 42% in total.

That means at age 60, your maximum benefit in 2023 is $836.20 per month versus $1,855.33 per month at age 70.

A whopping $1,019.17 difference.

CPP benefits are adjusted annually to account for increases in the cost of living, as measured by the Consumer Price Index (CPI). These adjustments help to ensure that CPP benefits keep pace with inflation and that retirees can maintain a similar standard of living as the costs of goods and services increase over time.

To illustrate this, if inflation is 3% in 2024, then your CPP benefits will be increased by 3% as well.

But not everyone is treated equally.

A person receiving the maximum benefit at age 60 will receive a monthly increase of $25.09 whereas a person who deferred to age 70 will receive an increase of $55.66.

More than double!

Just as your investments compound, inflation does too.

If you take the maximum benefit at age 60 and had a 3% inflation adjustment for 10 years, you would have a monthly benefit of $1,114.80.

Again, take the same calculation and apply it to the age 70 monthly maximum, you end up with $2,474.41 per month.

A jaw-dropping $1,359.61 monthly difference.

Ouch.

The main sources of retirement income for Canadians are RRSPs and Pension Plans. Both accounts have to be converted to a RRIF, PRIF, or LRIF at age 71. That means you have to generate some taxable income.

This, paired with Old Age Security and Canada Pension Plan benefits can push you into a higher tax bracket than you need.

Alternatively, you can defer CPP benefits to age 70 and draw down your RRSPs and Pension money faster until your CPP benefits kick in.

All taxes have to be paid when you die or if you're married, when the last of both of you die.

When it comes to investing, you have to be willing to take on several risks.