Should I Take CPP at 60 If I'm Still Working in Ontario?

For most Ontarians who are still working full-time at 60, starting CPP that early is the more expensive of the two choices — you lock in a permanent 36% reduction and then pay tax on the money at your working-income rate, which is usually the highest rate you will ever face. The main exceptions are shortened life expectancy, a genuine need for the cash flow, or a plan to invest or gift the money for reasons that have nothing to do with maximizing the pension itself. The decision is permanent after a 12-month cancellation window, so it is worth spending a few evenings on rather than a few minutes.

The arithmetic of starting five years early

The Canada Pension Plan reduces your retirement pension by 0.6% for every month you take it before 65. Thirty-six per cent at age 60, and 0.7% per month in the other direction, for 42% more at 70. Those adjustment factors are set in legislation and published by Employment and Social Development Canada on the Canada Pension Plan retirement pension page.

The dollars attached to those percentages are larger than most people expect. The maximum new CPP retirement pension starting at age 65 in January 2026 is $1,507.65 a month, according to the federal government's CPP payment amounts table. Very few people get the maximum — the average amount for new recipients starting at 65 is roughly $925 a month. Take that average pension at 60 instead and it becomes about $592 a month.

What makes the reduction sting over a long retirement is indexation. CPP is adjusted to the Consumer Price Index every January, and the Bank of Canada targets 2% inflation over the medium term. A smaller base grows by the same percentage as a larger base, so the gap in dollars widens every single year you live.

Statistics Canada research has found that close to 40% of Canadians born between 1940 and 1950 began their CPP at 60. Popular is not the same as optimal, but it does tell you the early start is a normal, unremarkable choice rather than a mistake.

What specifically changes when you're still employed

You keep paying into CPP, and you have no choice about it

This is the part that surprises people in London, Ontario the most. Collecting CPP does not excuse you from contributing to it. If you are under 65, working, and already receiving your pension, contributions continue automatically. For 2026 the Year's Maximum Pensionable Earnings is $74,600 and the employee rate is 5.95%, for a maximum base contribution of $4,230.45, plus a second tier of 4% on earnings between $74,600 and the $85,000 additional ceiling.

Those contributions are not wasted. They generate a post-retirement benefit, described on the federal CPP amount page, which is added to your pension the following January and paid for life. The maximum post-retirement benefit for 2026 is $54.69 a month, or $656.28 a year, and like the main pension it is reduced if it starts before 65.

You freeze your contributory record

Here is the quieter consequence. Once your retirement pension begins, additional contributions can only buy post-retirement benefits — they can no longer improve the underlying calculation. If your earnings history has thin years from a layoff, caregiving, a business start-up, or time outside Canada, then five more years of strong earnings between 60 and 65 could have displaced some of those low years and raised your base pension. Start at 60 and that door closes. People with uneven earnings records have more to lose here than people who hit the maximum every year.

The tax problem nobody puts on the spreadsheet

CPP is fully taxable, and it stacks on top of your salary. Taking $10,000 of CPP in a year when you already earn $85,000 means the whole amount is taxed at your top combined federal–Ontario marginal rate, which lands near 30% at that income level. Take the same pension at 65 when your employment income has stopped, and it may be taxed closer to 20%.

Unlike company pension income, CPP cannot be split with a spouse on your tax return. It can be shared through a separate CPP pension-sharing application, but that only works if both spouses are at least 60 and at least one is receiving CPP, and the mechanics are different from ordinary pension splitting.

A worked example on a $900,000 portfolio

Picture someone in London, Ontario — call her Dana. She is 60, earns $85,000, plans to work until 65, and has about $900,000 saved: roughly $600,000 in an RRSP, $200,000 in a TFSA, and $100,000 non-registered. Her CPP statement shows $1,300 a month at 65.

Step one — the reduced amount. $1,300 × 0.64 = $832 a month, or $9,984 a year.

Step two — five years of early payments. $9,984 × 5 = $49,920 collected between 60 and 65, before tax.

Step three — the tax bite. At roughly a 30% marginal rate on top of her salary, she nets about $34,900 of that $49,920.

Step four — the ongoing gap. From 65 onward she receives $832 instead of $1,300. That is $468 a month, or $5,616 a year, for the rest of her life. If her retirement marginal rate is nearer 20%, the after-tax gap is about $4,493 a year.

Step five — the crossover. $34,900 ÷ $4,493 ≈ 7.8 years past 65, so around age 73. On pre-tax dollars the crossover sits closer to 74. Statistics Canada's life tables put remaining life expectancy at 65 at approximately 19 years for men and 22 for women, which places the typical Ontarian well past that crossover.

Step six — the part the crossover misses. Dana's $600,000 RRSP has to start coming out as RRIF income by the end of the year she turns 71. The years between 65 and 71, when her salary has stopped and CPP has not yet started, are the lowest-tax years she will ever have for drawing that RRSP down. Adding $9,984 of CPP to her $85,000 salary at 60 does nothing for her; using those same five years to pull RRSP money at a low rate is a different outcome entirely. That trade-off is the whole subject of the RRSP meltdown guide, and it interacts directly with the minimum-withdrawal schedule covered in the RRIF withdrawal strategy guide.

"People ask me which age gives the biggest cheque, and that's the wrong question. I'd rather know what your taxable income looks like in your sixties, because that's what actually decides whether the early money is worth anything to you."

— Marc Pineault, retirement planner in London, Ontario

Where OAS fits into the picture

Old Age Security is separate from CPP, but the two meet on your tax return. OAS is reduced by 15 cents on every dollar of net income above the recovery-tax threshold, which is $95,323 for 2026 income. A reduced CPP taken at 60 pushes less income into that zone later than a full CPP taken at 65 would — a genuine, if modest, point in favour of starting early for people with large registered balances. The timing of the clawback test is its own puzzle, worked through in the OAS clawback strategy guide.

One more interaction worth knowing: once you have received the retirement pension for more than 15 months, you can no longer qualify for CPP disability benefits. For someone in their early sixties with a physically demanding job, that is a real door to close.

Situations where starting at 60 holds up

• A health condition or family history that makes reaching the mid-seventies genuinely unlikely.
• Reduced hours or a phased exit where the cash flow replaces lost income you would otherwise fund by selling investments in a down market.
• A fully maxed TFSA strategy where the after-tax CPP is redirected into tax-free growth rather than spent — the CRA's 2026 TFSA dollar limit is $7,000, with cumulative room of $109,000 for someone eligible since 2009.
• No RRSP to speak of, which removes the meltdown argument entirely.
• A business owner whose compensation mix is already being managed around CPP contributions — a topic covered in the salary vs dividends guide.

Working the decision through

Pull your Statement of Contributions from My Service Canada Account first; the estimate it shows assumes you keep earning at your recent rate, so it can overstate your pension if you plan to stop early. Then map your taxable income year by year from 60 to 75 and see where the low-tax years actually sit. Running both paths through the free retirement planning calculators and reading the CPP timing guide alongside this article will give you the shape of the answer before you ever sit down with anyone.

Marc Pineault works with people across London, Ontario and southwestern Ontario on exactly this sequencing question. The useful thing about the CPP start date is that it is one of the few retirement decisions you can model precisely — the formula is published, the amounts are published, and the only real unknown is how long you live.

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified professional before making any financial decisions.