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One way, but necessarily the only, to look at this is as a simple present value problem. For starters, lets assume an interest rate of 8% and you will live to age 85.

$430/month @ age 55: @pv(430*12,.08,30) = $58,090

$950/month @ age 65: @pv(950*12,.08,20) / 1.08^10 = $50,752.

Thus, given the assumptions, the better deal is $430/month @ age 55.

However, if you drop the interest rate assumption to 6%; the two alternatives are essentially identical in present value.


The next question is what percentage of the population that are living at age 55 will still be living at age 85?

I would take the $430 now as I think I can make more than 6% on my money.

In Canada every resident who is in the work force and contributes to the Canada Pension Plan is entitled to receive benefits based on a retirement age of 65. If you want to you can get the benefits starting at age 60 or postpone it until age 70. If you obtain the pension before age 65 the pension is reduced by 1/2% per month for every month you are under 65. For example at age 60 the benefit is reduced by 60 x .005 = 30%.
If you compare the benefit at age 60 to age 65 it takes until approximately age 78 to receive the same amount. Many people opt to take the pension at age 60 as there is no guarantee that they will reach age 78.

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