CPP and disability: When should you retire and start your pension?

Will your Canada Pension Plan disability income (CPP DI) continue once you retire and start your pension? 
And, should you start your pension now, knowing that your workplace disability income will stop?

Do you lose disability when you retire?
Let’s deal with your CPP question first. To qualify for and maintain CPP disability income, your disability must regularly prevent you from doing any type of substantially gainful work. “Substantially gainful work” is defined as earning income. Essentially, if you earn more than $18,503, the maximum CPP DI benefit for 2023, you will most likely be cut off.
There is a grey income earning range between $6,600 and $18,503 a year, in which your CPP DI may be reduced or even eliminated. In this range, it is difficult to estimate the impact on CPP DI because CPP deals with people on a case-by-case basis.
The good news for you, Wilma, is that CPP uses earned income as the measure of your ability to work and earn an income, and not passive income. Passive income is basically the income you didn’t have to work for to receive. That includes company pensions, registered retirement savings plan (RRSP) and/or registered retirement income fund (RRIF) withdrawals, rental property income, and so on. With a few exceptions, passive income will not affect your CPP.
So, the answer to your first question is: Yes, your CPP disability income will continue if you retire now and start to collect your pension. 
When on disability, should you retire early?
Now, is that what you should do? Like most things concerning money and retirement, it depends on factors like math, your lifestyle and spending behaviours, tax and group health benefits. 
If you retire and start your pension now, you will be replacing $16,000 a year with $29,905 annually for the next four years, before you turn 65. That’s an extra $13,905 a year, or an additional $55,620 over four years.
After 65, your lifetime pension will be $20,034 a year, rather than $23,034, if you waited until turning 65 before retiring. So, after age 65 you will have $3,000 less a year in today’s dollars. If I divide that $3,000 into $55,620, that tells me it will be 18.5 years before the pension pays out the same amount of money if you retired now rather than later at 65. That makes age 79 the break-even point for you. The best mathematical choice for starting your pension is at age 65 should you live beyond age 79.
A few things will shorten or extend the break-even point, though. For example, you may save and invest the additional $55,620 you earned by starting your pension now. Do that and the break-even point will extend beyond age 79.


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