Grant will qualify for a monthly CPP retirement benefit of $1,000 at age 65. Instead however, he chooses to begin his CPP one year early. How much will he receive on a monthly basis over the next year? and after age 65? (ignore inflation)
- $916 and $1,000
- $928 and $928
- $928 and $1,000
- $1,000 and $928
Solution: As Grant decides to take his CPP retirement benefits one year early, the reduction he will experience is over the rest of his life instead of just over the next year. The correct answer cannot be a, c, or d as the answers all have $1,000 in them. The reduction is calculated as 0.6% for each month he takes the benefit early. Grant will receive a monthly benefit of:
(1 – (12 x 0.006)) x $1,000 = $928
The correct answer is b.