Do Canadians take the Canada Pension Plan (CPP) early? Data from Statistics Canada show almost 40% of CPP users start payments at 60, not at the standard age of 65. Those who claim their pensions at the earliest possible time usually have immediate financial needs, health problems, or expect shortened life expectancy.

Smart move

The early take-up hurts the pocket because payments reduce by 0.6% per month before 65 or 7.2% per year. If you start at 60, the permanent decrease is 36%. Thus, instead of receiving the average monthly pension of $831.92, the payout drops to $546.05. Moreover, the reduction is permanent.

On the other hand, people without the issues mentioned above could claim later. Inversely, CPP users can start payments late or past age 65. It's smart if you do because a financial award awaits at 66, 67, 68, 69 or 70. The incentive is a 0.7% monthly increase after 65 or 8.4% annually. At age 70, the monthly pension becomes $1,181.33 because of the 42% permanent increase.

Unfortunately, the CPP payout is low or below the average working income (25% only). This serves as an incentive to save and invest to create pension-like income to secure your financial future. Financial planners advise having something other than the CPP and Old Age Security (OAS) in retirement.

Rock-solid retirement stock

Dividend investing is the best investment strategy for retirement wealth builders. A rock-solid, long-term investment Canada's energy giant Enbridge (TSX:ENB) is a no-brainer buy for the low-risk business model, lengthy dividend growth streak, and juicy dividend yield. At $59.40 per share (+33.6% year-to-date), the dividend offer is 6.2%.

This $92 billion energy infrastructure company has been paying dividends for 69 years and is a dividend aristocrat owing to 29 consecutive years of dividend increases. Furthermore, the competitive advantages are financial strength, resilient fundamentals, absolute demand growth, and a highly diversified portfolio.

In Q3 2024, profit climbed 143.1% to $1.3 billion compared to Q3 2023. In a nutshell, Greg Ebel, Enbridge's President and CEO, said, "We have positioned Enbridge's business model to succeed in all market conditions."

Ideal second-liner

Atrium Mortgage Investment Corporation (TSX:AI) is an ideal backup to Enbridge. AI is not a provider of next-gen technology but a $529.5 million non-bank provider of residential and commercial mortgages. At $11.26 per share (+14.45% year-to-date), the dividend yield is 8%. Since the payout frequency is monthly, the monthly dividend per share is $0.075. An added enticement is the special dividend once a year.

In Q3 2024, revenue rose 5.6% year-over-year to $11.6 billion, while the mortgage portfolio (97.3% first mortgages) reached a record $926.3 million. Another enticement is the special dividend once a year. Its CEO, Rob Goodall, said Atrium produced impressive results despite strong real estate market headwinds. Enbridge and Atrium in a passive income portfolio is a winner.

Firming up decisions

The CPP replaces a portion of pre-retirement income and users decide when to start pension payments. The timing for taking CPP centers around personal circumstances, financial needs, and lifestyle.