Collecting CPP several years before collecting SS.

[canroc]

I am a U.S. Resident, and Canadian Citizen.

I am entitled to CPP at age 60 for a reduced rate. It seems that the break even point is age 74, comparing to taking it at 65 at a higher rate.

My plan is to work until age 70 at which point I will have worked 30 years in the US, and thus apparently WEP will not apply.

However if I receive CPP from age 60 to age 70 while I work in the U.S. will my having received this affect my Social Security when I retire after working 30 years in the U.S.?

Thanks.

[nelsona]

The only thing that can impact SS is (a) taking it earlier rather than later (which is true for anyone, or (b) having it reduced by WEP (which you would avoid by working 30 years).

Since you plan on working anyways, you might aas well wait.

One thing to consider though, if you are married, is looking at when your spouse can trigger her SS, and maybe you getting the spousal amount while you wait

[canroc]

No chance of getting spousal amount while I wait, since my wife is 10 years my junior.. though I think she can get spousal amount off my benefits if I 'file and suspend'. I'll need to check that out.

Another question but relates to Social Security: The monthly benefit is calculated from an average of the top 5 years of 35 years of employment. If employment is less that 35 years (mine will be 30), then the non working years are calculated in as $0 income and thus reduces the average. Is there something in the US-Canada treaty that allows for this?.. i.e. counts years working in Canada towards the 35 years?

[nelsona]

Not quite sure how that is calculated, but taking what you said, then if you work 30 years, you will have 5 '0' year and get NO SS, which is obviously incorrect.

The top 5 years are the top 5 years, no? doesn't matter if you worked 10 or 35.

Maybe you could rephrase your question.

[canroc]

[quote="nelsona"]Not quite sure how that is calculated, but taking what you said, then if you work 30 years, you will have 5 '0' year and get NO SS, which is obviously incorrect.

The top 5 years are the top 5 years, no? doesn't matter if you worked 10 or 35.

Maybe you could rephrase your question.[/quote]

I don't know where I got the 5 years from. Just did some more reading. The 35 years of best earnings are used for calculation. If you have fewer than 35 years in which you earned income subject to Social Security taxes, the calculation of your average indexed monthly earnings will include zeros. For example, if you worked for 31 years, the calculation would include those 31 years of earnings, as well as 4 years of zeros. (this calculation is for what they call AIME - Average Indexed Monthly Earnings)

As a result, working additional years would result in those zero-earnings years being knocked out of the calculation and replaced with your current earnings.

I will not have 35 years working in the U.S. I was wondering is the US/Canada treaty allowed for earnings in years in Canada. It seems that it probably does not.

By working 30 of the 35 years I will probably get about 85% of the maximum I would have received otherwise.

[nelsona]

The totalization agreement (not the treaty) does nothing to "improve" SS. It merely provides for qualifying.
Personally, I wouldn't worry about it. Collect as soon as you can, triggering spousal amount. you could look into take and suspend, which is the tactic used by the older of the couple.

[canroc]

Thanks. I will 'file and suspend' when the time comes. That seems to be the best approach.

[canroc]

In my case, taking CPP early might not be a good idea, but I am not sure.

The Windfall Elmination Provision (WEP) would apply on my CPP benefit if I did a 'File and Suspend' of SS at age 66 (FRA) since I would be short 4 years of work for the 30 years needed. Four years later at age 70 I'd have the full 30 years and no WEP if filing then.

If having achieved the full 30 years income requirement four years after doing a 'file and suspend' on SS, would the WEP penalty be removed on the file and suspend number, or is that permanent from the day of filing?

One plan was take early CPP, collect that for the years until 66, then to file and suspend SS at 66, allowing my spouse to get spousal benefit at 1/2 of my benefit. However the WEP would affect the number on the filing part of file and suspend as well as the spousal benefit. With WEP reduction taking early CPP might not make sense.

Whether I take the CPP early or not depends on whether the WEP is removed while SS is suspended when the 30 years of work is reached.. It might be that I should wait until age 70 (30 years work) until i take the CPP to eliminate any WEP effect.

[nelsona]

You are in a rare position of possible avoiding WEP, so I think the regulare discussion doesn't apply.

But look at it this way. If your goal is to file and suspend to get spousal, does it really matter if WEP is applied for that period (to her amount)? YOu will still be getting bonus money. and the reduction will not be that much (remember WEP begins diminishing at 20 years, and you are only talking half of your SS). Your CPP can't be that great in any event.

[canroc]

You are right. There is not much reduction due to WEP and CPP in my case. (found a good program at maximizemysocialsecurity dot com, that runs the numbers and what ifs). And at 70 (30 years employment per SS) the WEP affect is removed.

Thanks.