The maximum CPP (Canada Pension Plan) benefit for a 65-year-old starting the payout in 2024 is $1,364.60. However, you can earn an additional 8.4% for every year the pension is delayed, increasing the maximum payout for a 70-year-old by 42% to $1,937.73.

But how can you earn the maximum CPP benefit in retirement?

The CPP depends on multiple factors, such as your income during employment, the amount of the monthly contributions, and the length of these contributions.

What is the maximum pensionable earnings?

Canadian residents contribute to the CPP every month while employed. These premiums are taken from their monthly paychecks and are limited to a certain amount known as maximum pensionable earnings.

The maximum pensionable earnings threshold has increased from $47,200 in 2010 to $68,500 in 2024. So, anyone earning less than $68,500 in 2024 will pay lower premiums and will not receive the maximum CPP benefit in retirement.

Moreover, the Canadian government has increased the employee and employer contribution rate in the last five years from 4.95% to 5.95%.

After adjusting for the basic exemption of $3,500, the maximum CPP contribution for employed individuals is $3,867.50, which is 5.95% of $65,000.

The maximum CPP contribution amount for self-employed individuals will double to $7,735.

To be eligible for the maximum CPP payment in retirement, Canadians should earn more than the maximum pensionable earnings throughout their working lives.

However, given the rise in inflation, it is advisable to supplement the CPP payout with other income sources and lead a comfortable life in retirement. Let’s see how retirees can use quality dividend stocks to supplement their pension payments.