Business & Investment

Retired: CPP pays you a little a month

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The Canadian Pension Fund (CPP) Fund reached $ 541.5 billion as of September 30, 2021. According to the CPP Investment Commission (CCPIB), the manager of the pension fund, they continue to build portfolios designed to achieve maximum rates of return without undue profits. Risk of loss to CPP users or future Canadian retirees.

However, CPPIB wants to manage the expectations of its recipients. Its main purpose is to provide a foundation for more than 20 million Canadians to build financial stability after retirement.Therefore, the message is CPP Severance pay systemNor does it replace the user’s pre-retirement income.

Pension amount

The actual CPP will vary and will depend on the amount and duration of the contribution, the age at which you start paying your pension, and your average income during your service period. For 2021, the maximum potential amount a new recipient (65 years old) can receive each month is $ 1,203.75.

However, only a few users are eligible for a maximum pension. According to the government website, the average monthly fee is $ 619.68 (June 2021). If the CPP replaces only 25% of the average pre-retirement, there is an income gap to fill. You will need an additional $ 1,858.14 each month to maintain your current lifestyle when you retire.

Investment strategy

Dividend investment One way to supplement CPP. Retirement planners suggest using your savings or free cash to invest income-generating assets. Also, in order to realize the power of compound interest, investment strategies need to be similar to CPPIB in the long run.

CPPIB invests in domestic and foreign public equities. As of September 30, 2021, the Board of Directors has invested $ 9 billion in TSX shares. For a regular investor, an investment of $ 104,000, a 20-year investment period, and a dividend yield of 6.305% can fully fill the CPP shortfall.

Source of income

Capital power (TSX: CPX) When Timber Creek Financial (TSX: TF) This is an attractive outlook for long-term investors. Public interest stocks pay a dividend of 5.38%, while financial stocks pay a large dividend of 7.23%. With an average yield of 6.305%, you can invest $ 52,000 in each today.

By reinvesting dividends without touching the principal, your investment will be $ 353,270 in 20 years. Assuming a constant average yield, your annual dividend income up to that point would be $ 22,273, or $ 1,856 each month. This strategy should have helped us recover 100% of our pre-retirement income.

Capital Power ($ 40.50) and Timbercreek ($ 9.59) have achieved stable performance this year, up 20.39% and 17.43%, respectively, year-to-date.Similarly, their business can be sustained Payment of dividends over the years..

After three-quarters of 2021, Capital Power reported a net profit growth of 20.9% compared to the same period in 2020. The $ 4.64 billion company is a growth-oriented electricity producer in North America. It owns and operates a power generation facility and serves customers in Canada and the United States.

Timbercreek is a $ 777.87 million non-bank lender with a unique business model. We provide short-term loans (within 5 years) to commercial real estate investors. Given the high loan-to-value ratio, lending policies are very conservative. As of the third quarter of 2021, the average loan-to-value is 69.6%, while 87.1% of the mortgage investment portfolio is made up of cash flow properties.

Gentle reminder

The CPPIB’s mission is to invest pension funds in the best interests of CPP contributors. However, the board reminds users that they need to save and invest to ensure a comfortable retirement.

Retired: CPP pays you a little a month Retired: CPP pays you a little a month

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