Simplify Your Cross-Border Retirement

Social Security Strategies When You Also Have a Canadian Pension

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If you worked in both the U.S. and Canada, there is a good chance that you will have both U.S. social security and a Canadian pension. Unfortunately, this brings an added wrinkle regarding when you should turn on each benefit.  This article discusses how the Windfall Elimination Provision (WEP) may reduce your social security benefit.  Having a social security benefit that is subject to WEP, makes social security planning even more difficult.  Do you draw your CPP early, which reduces how much your social security will be negatively impacted?  Or, do you draw social security early and wait to turn on CPP? This strategy allows you to draw social security for years before WEP impacts your benefit. This article discusses some of the timing strategies that you have when you have both social security and the Canadian Pension Plan (CPP).  

Starting Social Security Early and Delaying CPP

You can start drawing your social security as early as age 62 and you can delay and grow your CPP until age 70.  The biggest benefit of this strategy is the ability to draw social security for up to 8 years before you start collecting your CPP, therefore not having any WEP reduction for these 8 years.  One of the important things to remember about WEP is that your social security benefit is not reduced until you turn on your CPP.  Therefore, starting social security early allows you to collect an un-impacted benefit while allowing your CPP to grow until age 70.  

The biggest issue with this strategy is that once you do turn on your CPP, WEP is going to have a major impact on your social security benefit.  This is because if you have less than 20 years of work experience in the U.S., your social security will be reduced by half of your CPP or up to $512 in 2022, whichever is less. A $512 reduction in your social security benefit will be significant, especially given that you started social security early and already have a reduced benefit.

Delaying Social Security and Starting CPP Early

You can start CPP as early as age 60 and you can delay and grow your social security benefit until age 70.  The benefit of this strategy is that you are starting CPP early which reduces your CPP benefit and therefore reduces the amount in which your social security will be reduced by WEP. Also, you are getting a higher social security benefit, so the WEP reduction compared to total social security benefit is minimal.  

The hardest part about delaying social security this long and taking a minimal CPP is surviving those first few years of retirement with very little fixed income.  Although from age 70 and beyond you will have a high amount of social security coming in, you will need to rely on high retirement account distributions until you turn on social security.   

Recently, I had a client who had a private Canadian pension as well as CPP.  He had an incentive to turn on his Canadian private pension early as it stops growing after a certain age.  Also, because of the higher private Canadian pension, as soon as he turned on his U.S. social security, it would be reduced by $512 because of WEP.  Therefore, we determined he would be better turning on his Canadian private pension and CPP early and wait to draw his social security benefit until age 70.  

Delaying Both Social Security and CPP

In theory, this strategy seems to make the most sense because delaying both social security and CPP allows both benefits to grow, and allows you to collect a higher overall benefit.  Typically, the longer you wait to draw social security and CPP, the more that you will earn over your lifetime, as long as you live past around age 80.  Certainly, age 80 is not guaranteed, but becoming more and more likely as people are living longer.  Also, if you are married, your spouse will receive your higher benefit for the rest of their life, if you pass first.  Therefore, delaying social security provides a kind of insurance policy for your spouse.  

Still, the math doesn’t always make sense to delay both benefits.  For example, your social security will increase each year that you delay your benefit but your CPP will also increase. This may seem good, but this also means that your WEP reduction will also potentially increase as you delay CPP.  You could be in a situation in which your WEP reduction is growing by the same amount as your social security benefit each year, essentially eliminating the benefit of delaying.  If you are in that situation, you may decide to start either your CPP or social security benefit or continue to delay until social security starts growing by more than the WEP is reducing it.  

Start Both Social Security and CPP Immediately

Starting both of your benefits as soon as possible has its pros and cons. The benefit is that you are starting your CPP early which reduces how much your social security will be impacted by WEP. Therefore, the lower social security benefit you will receive by starting early won’t have as big of an impact. Also, you are collecting this fixed income in your 60s, when you may need it most, and are spending more money.

The negative is that this strategy will almost always provide the least amount of income over your life unless you pass away in your early to mid-70s.  Yes, your social security will have a minimal WEP reduction, but you are also starting with a lower benefit.  I’m not saying that you shouldn’t turn on both benefits early, but the tradeoff for starting your income early is a lower annual benefit over a longer period of time.  

In Conclusion

Deciding when to start social security is difficult enough, throw in your CPP benefit, and the timing strategy seems impossible.  There is no right answer when to start your CPP and social security benefit.  The decision needs to be based on the size of your social security benefit, CPP, the length that you worked in the U.S. and Canada, and if you have any other private pension plans.  Having this many options may seem daunting, but you should look at it as an opportunity.  Having this many options allows you to customize your retirement income to best suit your retirement needs.  

Do you have a CPP and social security and need help determining when to start both benefits? RetireMitten Financial specializes in helping families navigate the complex U.S. – Canada cross-border financial planning. Schedule a time below to speak with a cross-border planning specialist.

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47 comments

  1. I am a Canadian citizen and I lived in the united states for 28years and I am on a disability pension here in Canada and was wondering if I could collect the money I put in too the social security system in the united states? I am 62 years old

    Reply

    1. Hi Roger, absolutely you can collect U.S. social security as long as you contributed to social security while working here in the U.S. You would have need to worked in the U.S. for 10 years, or at least 1.5 years and in Canada for another 8.5 years.

      Thanks,
      Bryan

      Reply

      1. Dear Byan, I’ve heard rumblings that WEP will be phased out. Do you have any news? Many thanks, Rick

      2. Hi Rick, Yes, legislation to eliminate WEP is currently sitting in the House. It’s made it further than previous tries but still not a ton of traction. Let’s hope it passes.

        Thanks,
        Bryan

      3. I am confused by this statement.

        “You would have need to worked in the U.S. for 10 years, or at least 1.5 years and in Canada for another 8.5 years.”

        How would working in Canada for 8.5 years make on eligible for Social Security? I thought it had to be 10 in the US. If I am working in Canada I would not be contributing to Soc Sec.

      4. Hi, because of the U.S.-Canada totalization agreement you can combine US and Canada work experience as long as you work in the US for at least 1.5 years (6 credits).

        Thanks,
        Bryan

  2. Bryan, I am a 60 year old dual Canadian/US citizen living in the US, have lived in Canada for 19 years and moved to the US in 1999. Will a municipal pension plan income also reduce my social security payment because of WEP?

    Reply

    1. Hi Ed,

      Thanks for the question. Is your municipal pension from the U.S. or Canada? If from the U.S. it probably won’t reduce your social security, as long as you paid ss taxes while working there. If from Canada, it probably will impact social security as you will be subject to a higher WEP reduction.

      Thanks,
      Bryan

      Reply

  3. Bryan, question on CPP drop out calculation. I contributed to CPP from 1980 to 1999 before moving to the US in 1999. I am 60 years old and plan to draw my CPP when I am 65. Am I going to get a reduction in my CPP payout if I wait longer bec. I have not been making any contribution since 1999? If there is an impact, then I should start claiming CPP soon. Thank you. Ed

    Reply

    1. Hi Ed,

      I typically don’t see a person get a reduction in CPP benefits by waiting to claim. However, I have seen benefits grow at a lower rate and by waiting receiving less than expected. You will want to reach out to Service Canada to get your estimate at age 60 and age 65. Certainly, if your benefits actually are reduced you would want to start benefits ASAP. I just haven’t seen this situation.

      Thanks,
      Bryan

      Reply

      1. If you wait from 60 to 65 to collect cpp, the added “zero” years of income from 60 to 65 will likely reduce your cpp in real terms.

      2. CPP does increase by 7.2% each year that you delay from 60 to 65. However, because of WEP, many of my clients find it better to start earlier as opposed to delaying.

        Thanks,
        Bryan

  4. Hello Bryan, I am a Canadian citizen, my husband is a dual Canadian US citizen. I have been researching spousal Social Security benefits. My understanding is that I am eligible to receive 50% of his benefit if I delay retirement to 66 years of age and 10 months (I was born in 1959). My husband began receiving benefits at age 62. I see that my benefit would be reduced by the WEP maximum; approximately $450 CDN per year as I receive CPP and a work pension. Do I understand this correctly? Thank you

    Reply

    1. Hi Rosemarie,
      Thanks for the question. Yes, you are eligible to receive up to half of your husbands social security benefit. However, a spousal social security benefit is typically not subject to the WEP Reduction. Therefore, you will probably not have a $450 per month WEP reduction.

      Best regards,
      Bryan

      Reply

  5. Hello Bryan, I am an RN who worked in the US under a TN visa for 17.5 years and left to return to Canada 7 years ago. I have been trying to plan for future retirement in Canada and am struggling to find anyone (live in Newfoundland) who has any idea about my US SS benefits in relation to CPP and thus help with my retirement planning. I am 51 this year. Do you provide assistance with this for Canadians ? Your articles are very helpful.

    Thanks in advance,
    Corinna Simms

    Reply

  6. Hello, Bryan
    I lived in Canada as a “Landed Immigrant” (my husband and I are Americans),for 20 years. I was a homemaker caring for our 3 children. He worked for 23 years in Canada before our divorce.We returned to the US 25 years ago and a few years after returning my husband moved back to Canada and we divorced after 33 years of marriage. I worked in US for over 20 years and 31/2 years ago started collecting my SS benefits at age 66.
    Am I eligible to collect a portion of my former spouse’s CPP benefits? If I collect CPP, how will this affect my SS benefit? The US benefit is only $6 hundred/ mo. after Medicare and taxes deduction.
    Thank you so much for your response

    Reply

    1. Hi Chriss,

      Thanks for the question. Yes, it is possible to collect part of your ex’s CPP. However, if you collect part of his CPP, he will get a reduction to his benefit. Therefore, many times this is determined at the time of divorce. You can still try to get some of his CPP now. If you do collect CPP, you will probably get a small reduction to your Social Security because of the Windfall Elimination Provision.

      Thanks,
      Bryan

      Reply

  7. Hi Bryan,

    I am a Canadian and worked in Canada until I was 30 and then moved to the US and have been working here the last 33 years. I have a small CPP benefit I can collect and a much larger SS here. Since I;ve worked in the US for >20 years am I exempt from WEP?

    Reply

  8. Bryan,

    My situation is almost identical to Ed’s, the last question here. I had no idea there was a WEP until now, after already retiring. I just read that you have to have 30 years of “substantial earnings” in the US before you are exempt from WEP, not just 30 years of earning, so your answer to Ed is not necessarily correct. He should read the 2-page Soc Sec Publication 05-10045, which explains exemptions from WEP, including how “substantial earnings” is defined.

    My wife and I are both age 69, each have a small CPP benefit which we’re not yet receiving, and each a larger but still not large US Soc Sec benefit that we are receiving. We have been in the US for 41 years, but we don’t meet the requirement of 30 years of “substantial earnings”, so if we file to receive our CPP benefits we stand to have our Soc Sec benefit reduced by $480 each or even more, which is way more than our CPP benefits. My question is … Can we legally avoid WEP by never filing to draw our CPP benefits? Is it “legal” to not draw CPP from Canada? And is this another legal way to in effect become exempt from WEP in the US?

    Reply

    1. Hi Clive,

      You don’t have to collect CPP, there is nothing illegal about that. I’m sure Canada would be more than happy to keep the money.

      The most your social security can be reduced is the lesser of the maximum WEP reduction ($480 in 2020) or 1/2 of your Canadian pension. If you have a small CPP, you can only lose up to 1/2 of it. Therefore, it is never a good idea to not collect your CPP. Half of your CPP may not be big, but it is better than nothing.

      Best Regards,
      Bryan

      Reply

  9. Thanks for the reply. What you say here is great news for us. I haven’t seen anything in WEP info that says “the lessor of the max WEP reduction or 1/2 of another county’s pension benefit”. Can you point me to where that is documented by the SSA?

    Reply

  10. Actually I just found it myself. The WEP document I referred to in my first message has a paragraph on this, which I had not interpreted properly when I first read it.

    I also found this statement elsewhere: “The more years in which you had “substantial earnings” from Social Security–covered work, the less the provision (WEP) cuts into your benefits.” This is also good news for us.

    Thanks for your help. I’m glad I found your web page.

    Reply

  11. Hi Bryan

    I have worked 6 years in USA and will have worked 20 years in Canada when I retire. I was under the impression that I will not get social security since I do not have 40 credits (I have 24). I was thinking to do 4 more years in USA but after reading your website it does not seem to be necessary. Can you shed more
    details on how it would work for me.

    Reply

    1. Hi Manj,
      You should qualify for US social security given your US and Canada work experience. You can combine your US social security years worked plus your Canada years worked to qualify for US social security. This is because of the U.S. Canada Totalization Agreement. You can qualify for social security already, however, you do need 40 credits to qualify for Medicare. Thanks, Bryan

      Reply

      1. Thank you Brian how much social security would I get based on 6 years US and 20 year Canadian experience. From CPP calculations I would get around 1k per month CPP at 65 how much SS would I be able to get? An approximation would be good?

      2. Hi Manj,
        It depends on how much you are earning here in the states but $75 per month per year worked us a decent estimate. Roughly $450 – $500 per month or so from social security.

        Thanks,
        Bryan

  12. Great article, Bryan! (Actually, your entire website is full of helpful info for people like me with US and Canada cross-border issues.)

    1) I know that benefits (SS and CPP) are indexed (e.g. COLA) and therefore can change every year. But does a person’s max WEP reduction (e.g. $512 for 2022) stay the same each year?

    2) I’m applying for Social Security benefits this year (no WEP reduction). When I eventually start taking CPP benefits (in some future year), how would I notify SSA of my CPP start date and any changes in my CPP benefit (as it is adjusted each year)?

    Reply

    1. Hi Pam, Thanks for the kind words.

      1. Your WEP Reduction is locked in once you start your second benefit (in your case once you apply for CPP). However, the maximum WEP reduction does increase each year with inflation until you start CPP.

      2. You will want to call or visit a SSA office to notify them of your CPP once you begin your benefit. Your WEP is locked in and will not change based on CPP increasing or the change to the exchange rate.

      Thanks,
      Bryan

      Reply

  13. Bryan,

    I am a dual U.S./Canadian citizen. Worked in Canada from age 25 to 41. Moved the States and worked for 6 years before starting my firm.

    My Social Security account shows I need 4 more years of credits. I have not been paying into Social Security for the last 4 due to illness and now as I am recovered thinking of going back to industry.

    Question is, I cannot combine Canadian Pension Plan with Social Security right? I need a minimum of 10 years of paying into Social Security for that benefit and to qualify for Medicare.

    We are no intending to go back to Canada but I need some clarity, if you can get credit with Social Security for the time you worked in Canada and get a reduced amount and qualify for Medicare. That’s what I have been told before by my former employer but reading your excellent site, believe this was very wrong information.

    Regards
    David

    Reply

    1. Hi David, Yes, you should be able to combine your U.S. social security years worked and Canada years worked to qualify for social security. However, the Totalization Agreement does not apply to Medicare. If you are going to stay in the states, you will probably want to have free Medicare (You can pay for it if you don’t have 10 years of U.S. work). Therefore, I would try to get another 4 years of U.S. work to qualify for Medicare.

      Thanks,
      Bryan

      Reply

  14. Hi Bryan, thanks for the posting. I worked in Canada for 8 years and have been working in the US for the past 16 years. I am thinking of retiring in 3 years at 62. Can I combine both US social security and CPP? What would be the implications? Can I start at the same time or do i have to start one earlier. Appreciate your help.

    Reply

    1. Hi Marc,

      There is a lot to this question, but the simple answer is that you will receive both a CPP benefit and social security. You will probably have a small reduction to your social security because of CPP. They are separate benefits that can’t be combined. You apply to each country to begin and they don’t need to start at the same time.

      Thanks,
      Bryan

      Reply

  15. Bryan, Just to try and be clear on WEP or the Governement Pension Offset. My wife is eligible for the CPP and she is getting social security under her own record. So we have not claimed the CPP yet. My wife’s spousal benefit for soc sec will be much higher based on my earning record. Our plan has been to wait until I start collecting social security then have my wife switch to spousal benefits. My reading on this topic and your helpful articles and responses makes me conclude that the WEP will NOT apply to spousal benfefits? However, I heard a social security representative make a comment that the WEP will still apply to that portion of the spousal benefits on my wife’s own record and not the portion that gets ” uplifted” to the Spousal benefits based on my record. For example if on my wife’s own record she collects $800 per month and with total spousal benefits let’s say it is $1600 ( my portion on my record “uplifted” her $800 when she switches to Spousal benefits). Have you ever heard this or seen this happen? Also do you concur that the GPO will not apply becuase the CPP is a foreign pension and is exempted by Social security regulations?

    Thanks
    Tony

    Reply

  16. My wife moved and became a US citizen after our marriage. She is 61 now and gets a $400/month(US) CPP now. Will she be able to collect spousal US Social Security benefits at 62 in October?

    Reply

  17. Dual citizen living in Canada. If I qualified for US SS based on earnings in the USA (20 years) without counting any work in Canada, am I still subject to WEP when I collect my CPP at age 70? When I apply for CPP, does Canada inform the USA so they can apply the WEP?

    Reply

  18. Great article, thanks, Bryan. I was reading through all the questions to see if mine was answered, but I’m still a bit confused. I worked for 20 years in Canada before moving to the USA. I now have 21 years of work in the USA. I’m divorced from my Canadian husband (who also lives in the US), and we were married for 25 years (divorced about 12 years now). He made considerably more money than I did. Can I income split SS and CPP? How does the WEP impact both retirement plans? Thanks for your help.

    Reply

    1. Hello, you probably can’t income split your CPP. If you receive some of his CPP benefit, he will get less so typically this is figured out during the divorce settlement. You are entitled to your own SS benefit or half of your ex husbands benefit, whichever is higher. WEP would decrease both your and your ex husbands benefit, and SS can determine which benefit is higher after the WEP reduction. WEP does not impact CPP.

      Thanks,
      Bryan

      Reply

  19. Hi there. My husband was born in Canada. I am a US citizen and moved there when we got married. When we moved back to the US, he was 35 and had worked in Canada since before he was 18. I lived in Canada for 6 years with him but did not work. He is now 50 and I am 48. He has been working in the US (as a US citizen) for the last 15 years that we have been here. I am starting to look at retirement planning and your website has been the most informative so far. With that, I’m still a little confused. I have lots of questions:
    1 – How can we find out what is CPP and OAS benefits are (if anything)?
    2 – I read somewhere that he had to have worked in Canada for 20 years after he turned 18 to get the CPP (I think it was). He only worked for 17 years after that. Does that mean he gets nothing or is it just reduced.
    3 – I know in the US, I will get 50% of his SS. Does that apply to Canada benefits as well?
    4 – This is the first I’ve read about the WEP. I have never heard of that before. How do I go about figuring out the best way for us to do retirement and how that might factor in?
    5 – Do you offer paid services on situations like these? If so, where can I go to find out the cost and when I should do that?

    Thank you so much!

    Reply

  20. Hi Brian,
    Your article is awesome and provided me with answers that the ‘expert in the Canadian and USA situation’ could not answer … he did not even know about WEP!

    I’m a Canadian living in Montreal. I lived in the USA for about 14 years and contributed to Social Security for 13 years. So, I’m entitled to get SS benefits when I retire. Now, I have a Canadian spouse who will also be able to get Spousal SS Benefits. From reading the different comments, I understand that my spouse’s SS amount will not be affected by WEP from his QPP and Quebec Government employee pension plan (RREGOP).

    The question I have is: what is the base from my SS benefit used to calculate my spouse’s SS Benefit? Will it be 50% of the amount I get, including the reduction due to WEP on my side? For example, assuming I get $2,000/month (based on $2,400 benefit – $400 WEP), will my spouse then get $1,000/month?

    Thanks in advance for you help,
    Luc

    Reply

  21. Hello Bryan

    Thank you for the informative article and comprehensive replies to comments!

    I wonder if you know of a calculator in which one can use to determine SS payments expected based on the Canada / Us agreement, number of years worked in the US and one’s CPP payment amounts?

    Or if you can give me a rough idea of what I would get in this situation

    I am 65
    My CPP payment is $250 per month
    I worked in the US later in life, and my earnings on which I paid SS were $375,000
    I worked in the US for 5 years.

    Would you be able to estimate how much I could get in SS per month if I applied now?

    Many thanks!
    Mary

    Reply

    1. Hi Mary,
      I’m glad you find this helpful. I find that you tend to earn about $50 to $100 per year worked. So if you have worked here for 5, years, your benefit may be between $250 to $500 per month. You may have a small reduction as well because of your CPP.

      Thanks,
      Bryan

      Reply

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