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With most unincorporated farmers, the cost of CPP makes up a large portion of their tax bill. As such, I am asked often by clients if this is worth the investment or should they be looking at other options. To help them choose, I generally provide some rough numbers:
It’s tough to imagine that the CPP annual benefit would increase that much and the situation is even worse if you pass away before 79. However, the only consolation is that your estate receives the $2,500 death benefit. If you are married, your spouse receives only 60% of the payments you were entitled to.
If you were able to put the CPP contributions into your own savings plan, you (or your estate), would still have the $635,000 of value at your disposal even if you were to die earlier than 79.
Having some idea on the numbers now, you can choose what’s the best option for you.
For more information, contact Bruce Warkentin, CPA, CA, CBV, CPA (Illinois) Business Advisor, Taxation, at
Related Topics:Farmers; Retirement
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