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Would you be willing to wait a decade longer for an extra $100,000 in benefits?

That's the question Canadians need to begin asking themselves, as Ottawa phases in changes to the Canada Pension Plan over the next five years that will lower the monthly stipends early retirees receive and raise them for those who choose to keep working.

Under the current system, those who begin collecting CPP payments early see their benefits permanently reduced by 0.5 per cent for each month the pension is taken before their 65th birthday - a 30-per-cent cut for those who retire at 60. By 2016, CPP changes will increase that reduction to 0.6 per cent, up to a maximum of 36 per cent.

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In addition to deterring early retirement, the new rules provide added incentive for Canadians to keep working past age 65. While the current system rewards late retirees with a 0.5-per-cent increase in benefits for each month they delay retirement, that bonus rises to 0.7 per cent under the new system, up to a maximum of 42 per cent.

Tina Di Vito, head of the BMO Retirement Institute, has worked out the math and says the annual payment for a full CPP will be about $4,000 less if one decides to start collecting at age 60 instead of 65, and about $4,600 more if one decides to wait until age 70.

Assuming 100-per-cent eligibility for CPP and a life expectancy of age 90, Ms. Di Vito says someone who takes CPP at 60 will receive 64 per cent of the full benefit for 30 years, for a total lifetime amount (ignoring inflation adjustments) of $215,233, while someone who takes CPP at 70 will receive 142 per cent of the full entitlement for 20 years, totalling $318,365. That's a $100,000 difference if you wait until 70 to collect CPP.

So is it worth it? There are many things to consider when choosing your retirement age. Your savings are a major consideration, because you'll need that money to compensate for lower government pensions if you retire early. "You do need to look at personal situations," Ms. Di Vito says.

What's great about the new rules is they give those who haven't saved enough, or whose investments were hurt by the recession, the chance not only to keep working, but also to keep contributing to the CPP, thereby raising their eventual entitlement. Ms. Di Vito calls that "having your cake and eating it too."

So who will benefit most from these changes? According to a chart from HRSDC, if you are healthy and expect to live a long time, have an average or better income and have seen some gaps in your employment history, or perhaps a divorce ate into your pension credits, you're likely to benefit from a later retirement. If, however, you're sick and don't qualify for disability benefits, have a lower life expectancy, have a low income, or are unemployed now but have a continuous employment history, you may as well go ahead and retire early.

If you're still having trouble deciding, Ms. Di Vito suggests applying for a benefits statement from Service Canada, which will show your history of CPP contributions and give an estimate of your pension entitlement at different retirement dates. "It's a really handy, great item to get for anyone who is 55 or older," she says. "It's a good planning tool because you may be surprised that you may not be entitled to the maximum."

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An earlier version of this article stated you must work an extra 10 years to receive $100,000 in additional CPP benefits. It has been corrected to state that you must wait until age 70 to begin collecting CPP in order to receive the additional benefits.

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