Changes to the Canadian Pension Plan.

• Author: Bissonette, Laurie
• Position: BUSINESS SENSE

Like it or not, the retirement goal posts are moving. On average people are living longer. When I started working and saw those television commercials that talked about retiring at age 55, I thought--do people really live that long? As that age creeps closer, it seems implausible that people would retire so young.

There are people who are resisting retirement at any age and others who are forced to keep on working due to financial circumstances. The trend now is towards a more gradual and flexible retirement. There isn't a hard and fast rule as to when we should retire. But knowing what's in store can help us be prepared financially, including significant changes to the Canadian Pension Plan, recently unveiled.

What to Expect If You Take CPP at Age 60

While many dream of retiring early, they may not realize the implications if they choose to take their CPP retirement pension before turning 65. Before this year, for every month before age 65, a 0.5 per cent reduction would be taken from your benefit payment if you made this choice. That would be a full 30 per cent less at age 60 than if you had waited to retire until you were 65.

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Beginning this year, there will be an even larger reduction of up to 31.2 per cent, or 0.52 per cent per month before age 65, for those who want to retire early For example, the maximum CPP payment in 2012 is about $987 per month. If you're 60 this year, eligible for the maximum payment and you choose to start receiving benefits this year, you will get about $678 per month. By 2016 the reduction will climb to 36 per cent or 0.6 per cent per month before age 65.

If You Wait Until Age 70

On the other hand, there are benefits for those of you who want to wait until after the age of 65 to retire. Instead of a 0.5...