World News – CA – CPP Annuity and OAS Payments: How Much Can You Get?

The Colored Fool Canada Bank Stocks CPP Annuity and OAS Payments: How Much Can You Get?

Christopher Liew, CFA | 25th. November 2020 | More about: BNS BNS

The March COVID-19 outbreak and the second wave in the final quarter of 2020 have increased uncertainty, especially for Canadians nearing retirement. You can look forward to the Canadian Pension Plan (CPP) and Old Age Insurance (OAS).

However, if you have little or no savings, it is best to know how much you can get out of retirement in Canada. You may need to supplement the pensions to live comfortably through the sunset years.

CPP is a defined benefit plan although the government does not own, fund, or manage the assets. Employees (plus employer’s contribution) and self-employed contribute from their paychecks to the CPP throughout the working years. The Canada Pension Plan Investment Board (CPPIB) manages the pension fund on behalf of CPP users.

The standard age for applying for the CPP is 65 years. For example, if you are 65 and eligible today, the average monthly pension is $ 710. 41. The maximum is 1. $ 175. 83, but you should have contributed enough to receive payment in full.

You can claim your CPP earlier at 60. However, you risk a permanent pension reduction of 36%. However, the amount is reduced by 0. 6% for every month (7. 2% per year) before the age of 65. age. If you wait until 70 you will get 42% more pension if the payment increases by 0. 7% every month (8. 4% per year) after your 65. age.

OAS is a state benefit and is not a deduction from the wages and salaries of employees. Some of the income taxes levied by the government go to the OAS pot. If you are 65 years old, you can apply for a monthly pension from the OAS.

There is no early option for the OAS as it is available to Canadians 65 and over. The maximum monthly payment is $ 614. 14 per month (October to December 2020). If you want to improve payments, you can move the OAS to 70 as well. The amount increases by 7. 2% for each year of delay or a maximum of 36%.

Yes, your CPP and OAS are Guaranteed Income for Life. But now that you know how much you’re getting, pensions alone won’t be enough. Retirement experts suggest you find other sources like investment income. Save more so you can invest in dividend stocks.

One of the five major banks, the Bank of Nova Scotia (TSX: BNS) (NYSE: BNS) or Scotiabank, offers a hefty 5. 67% dividend. The share price of $ 63. 48 is relatively low, a steal if you can get a position today. A retiree with shares worth 150. Earned $ 000 close to monthly CPP payment.

Scotiabank has been a reliable source of income for more than a century (almost two, actually). . This $ 77. 72 billion banks and the third largest in Canada have 188 years of dividends. The payouts should be sustainable given the payout ratio of 64%.

Findings from Scotiabank’s latest poll show Canadians are becoming better savers and frugal donors because of the impact of COVID-19. Financial priorities are changing, with 53% of respondents prioritizing saving for emergencies.

Go one step further by creating an additional source of income in retirement. When you have a source like Scotiabank, you are ready to retire for good.

Speaking of how much an aspiring retiree can expect from CPP and OAS. . .

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Pension, Canada Pension Plan