Also important to consider are females who dropped out of the workforce to have a child. “If they've taken time off to have a family...females can drop out more years from the calculation, which can see their CPP cheque bumped up. But the SOC wouldn't take that into account. The document might show a lower amount of money than what you are entitled to,” says Runchey.
Another typical concern is around credit splitting between married couples. “Sometimes this is good, sometimes this is bad,” he says. Predicting impact of credit splitting can only be based on the actual individual cases. To know whether this would be a benefit is, again, a matter of doing the math.
Also common are questions from self-employed people. Some think it makes sense to not make contributions to the CPP and instead put that money in an RRSP where the money can be taken out as a dividend payment. Because dividends are taxed lower than income (which CPP is considered) there is a saving. "There are many more in small business today and have ability to choose how they pay themselves,” says Runchey. But again, this is a complex question that is only answered once the individual case is considered.
There is also a question about when to begin getting CPP. Should one claim CPP early, or wait until later? Waiting until 70 to draw on CPP can see an individual receive 42% more on their cheque. But recent changes around those who work post-retirement have shifted the answer to this question says Runchey, “Overall, the organization does a good job of crunching the numbers. But there are a couple of hidden details someone should be aware of. Each case is different. You don’t know until you do the calculations.”
In fact, the government began introducing a slate of rule changes to CPP in 2012. These new rules will be fully implemented by 2016, and should bulk up benefits, which the government is hoping to do. It turns out not many Canadians have saved enough for retirement. According to Runchey, “the take up on RRSPs was not what the government expected. People are living for today and are not saving. Which is why the provinces are looking at this.” The decision by Ontario to create a new provincial pension plan is an example of the worry among politicians.
Runchey is, himself, semi-retired. He typically works with two clients a day. “The rest of the day I work on life." He also contributes to several Canadian financial forums and writes pension-related articles for the website retirehappy.ca (run by the popular Edmonton-based advisor Jim Yih). Baby boomers are his biggest client segment, though he does get some keen 40-year olds asking wondering they can retire. “I'll run the numbers for a forty year old…but I tell them they are not very meaningful. Who knows what will have changed by then.” One sixth of his clients come from financial planners. If an advisor sends enough business he will take the time to train them on the details of what they need to tell their clients to send over. If an advisor sends him one client a month he offers a 20% discount on rates. "As far as I know, I am one of a kind," says Runchey. His work can be done online now. So his client base is across the country and around the world in the case of Canadians living abroad.
You can find D. R. Pensions Consulting at http://www.drpensions.ca/