OAS Payments: How Much Will You Receive From Old Age Security

By Robb Engen | May 2, 2024 |

OAS Payments: How Much Will You Receive From Old Age Security

Old Age Security (OAS) is a government program in Canada that provides a basic income to eligible seniors who have reached the age of 65. It is one of the three main pillars of Canada’s retirement income system, along with the Canada Pension Plan and personal savings.

Eligibility for OAS is based on several factors, including age, residency, and income. To receive OAS payments, you must be 65 years of age or older and have lived in Canada for at least 10 years after the age of 18.

OAS is considered taxable income. As of January 2024, the OAS maximum payments from age 65 to 74 is $713.34 per month ($8,560.08 per year), and $784.67 per month ($9,416.04 per year) for those ages 75 and older.

The amount of OAS you receive is based on how long you’ve lived in Canada after the age of 18. If you have lived in Canada for less than 40 years, you may receive a partial pension. For instance, if you lived in Canada for 35 out of the 40 eligible years you would be entitled to receive 87.5% of the OAS maximum payment (35 divided by 40).

The amount you receive may be reduced if your income exceeds a certain threshold, which is $86,912 for the income year 2023. If your income exceeds this amount, your OAS payment will be reduced by 15 cents for every dollar of income above the threshold. This OAS “recovery tax” period takes place the following year (July 2024 to June 2025).

Since July 2013, most eligible seniors are automatically enrolled to receive OAS starting at age 65. The government determines your eligibility the month after you turn 64. If eligible, you will be notified of your automatic enrolment beginning at age 65. That means, if you are still working or simply plan to defer taking your OAS benefits to age 66 to 70, you should contact Service Canada to declare your voluntary deferral.

Otherwise, to apply for OAS, you must complete an application form and provide proof of age and residency. You can apply up to 11 months before you turn 65, and you should receive your first payment within three months of your application being approved.

To apply online you’ll need a My Service Canada Account (MSCA).

In addition to OAS, there are other government programs that may be available to eligible seniors, including the Guaranteed Income Supplement, the Allowance for Spouses, and the Allowance for Survivors. These programs provide additional income to low-income seniors and their spouses or survivors.

Overall, Old Age Security is an important program that provides a basic income to eligible seniors in Canada. While the amount of OAS you receive may vary based on your income and residency, it can provide a valuable source of income in retirement. If you are approaching the age of 65, it is important to consider your eligibility for OAS and other government programs that may be available to you.

Deferring OAS to age 70

Deferring Old Age Security to age 70 is an option for Canadian seniors who have the financial capacity to do so. By delaying your OAS payments, you can increase the amount you receive each month.

For each month that you delay your OAS beyond age 65, your pension will increase by 0.6%, up to a maximum increase of 36% if you delay OAS until age 70. This means that if you delay your OAS for five years, you will receive 36% more per month than you would if you started collecting at age 65.

However, it is important to carefully consider whether delaying your OAS is the right choice for you. If you have a shorter life expectancy or if you need the money to cover your living expenses, it may be better to start collecting your OAS at age 65.

Additionally, delaying your OAS may affect your eligibility for other government programs that are based on your income. For example, if you delay your OAS and receive a higher pension at age 70, your income may be higher and you may no longer be eligible for certain programs, such as the Guaranteed Income Supplement.

Overall, delaying your OAS to age 70 is an option that can provide a higher monthly pension, but it may not be the right choice for everyone.

OAS Payment Dates 2024

The OAS payment dates for 2024 are:

  • January 29, 2024
  • February 27, 2024
  • March 26, 2024
  • April 26, 2024
  • May 29, 2024
  • June 26, 2024
  • July 29, 2024
  • August 28, 2024
  • September 25, 2024
  • October 29, 2024
  • November 27, 2024
  • December 20, 2024

Payment dates may vary depending on your payment method. If you receive your OAS payments by direct deposit, it should be deposited into your account on the payment date. If you receive your payment by cheque, it may take a few additional days to arrive by mail.

OAS is Indexed to Inflation

While Canadians can expect their CPP payments to increase annually based on the previous year’s Consumer Price Index, OAS recipients have their benefits adjusted quarterly to provide better protection against unexpected sharp increases in prices over the year.

The quarterly inflation adjustment for OAS benefits is based on the difference between the average CPI for two periods of three months each:

  • the most recent three-month period for which CPI is available, and
  • the last three-month period where a CPI increase led to an increase in OAS benefit amounts.

OAS payments starting in the first quarter of 2024 were indexed by 0.8%.

OAS Payments Increase at age 75

In July 2022, the Canadian government announced an increase to the OAS pension for seniors aged 75 or older. Starting in July 2022, the OAS pension for seniors aged 75 or older was automatically and permanently increased by 10%.

If you turn 75 after July 1, 2022 you will receive the increase in the month following your 75th birthday.

The 10% increase in the maximum OAS pension rate will not affect the calculation of your Guaranteed Income Supplement (GIS).

The increase to the OAS pension for seniors aged 75 or older is in recognition of the increased costs and challenges that seniors face as they age. The government hopes that this increase will provide additional support to seniors and help them maintain a good standard of living in their later years.

OAS Clawback Threshold

The Old Age Security (OAS) clawback threshold is the income level at which your OAS payments will be reduced or “clawed back”. The OAS clawback is designed to ensure that OAS payments are targeted to those who need them the most, by reducing or eliminating payments for those with higher income levels.

The OAS clawback threshold for the income year 2023 is $86,912. This means that if your net income (which includes income from all sources, such as employment, pensions, investments, etc.) exceeds this amount, your OAS payments will be reduced by 15 cents for every dollar of income above the threshold. 

For example, if your net income was $91,912 in 2023, which is $5,000 above the clawback threshold, your future OAS payments will be clawed back by $750 (15% of $5,000). This “recovery tax” period takes place from July 2024 to June 2025.

If your net income exceeds $142,124 in 2023, your OAS payments will be fully clawed-back during the OAS recovery tax period the following year (July to June).

The timing and mechanics of this is important to note.

Let’s say you applied for OAS benefits upon turning 65 in June 2023. You earned $145,000 in 2023 due to a variety of income sources, including capital gains from the sale of a rental property. You file your 2023 taxes in April 2024 and CRA determines that your taxable income that year has exceeded the OAS clawback threshold.

Meanwhile, you’ve been receiving OAS payments monthly since July 2023. You won’t get a bill to repay the approximate $8,292 you received in OAS benefits between July 2023 and June 2024. Instead, your repayment amount is deducted from your ongoing OAS payments as a recovery tax starting in July 2024.

You will receive a letter informing you of any recovery tax deductions being withheld from your OAS pension payments.

*Changes in OAS Eligibility (not happening)*

Back in 2015, the federal government led by Stephen Harper proposed changes to OAS eligibility – increasing the age of eligibility from 65 to 67. This would have gone into effect as of April 1, 2023 and be fully implemented by January, 2029.

This proposal was quickly repealed when the federal Liberal government was elected in 2015. It’s not happening, folks.

You can continue to apply for OAS benefits and receive them starting at age 65.

Final Thoughts

OAS is a complicated system but one that is critical to retirement planning for many Canadians. It’s important to understand how much OAS you can expect to receive in retirement, and when you plan to take your OAS benefits (between ages 65 to 70) to maximize your income and minimize any clawbacks.

Speaking of clawbacks, it’s also important to understand that OAS benefits are means-tested, meaning once your income rises above a certain threshold your benefits will be clawed-back by 15 cents for every dollar above that threshold. In some cases, OAS benefits may be completely clawed back.

It’s important to work with a financial planner who can help you understand how the timing of retirement, crystallizing capital gains, and withdrawing from an RRSP or RRIF can impact when you should take your OAS benefits and whether your benefits will be clawed back.

It’s also important to note the advantage of pension income splitting with a spouse (for defined benefit pension income and RRIF / LIF income at age 65 and beyond), and how this helps avoid OAS clawbacks in many cases.

OAS payments are indexed to inflation and benefits are adjusted quarterly to keep pace with inflation (versus CPP, which is adjusted annually in January).

Will you take your OAS at age 65, or do you plan on deferring OAS to age 70? Do you have strategies in place based on retirement, capital gains, RRSP/RRIF withdrawals, that will impact when you decide to take OAS?

CPP Payments: How Much Will You Receive From Canada Pension Plan

By Robb Engen | May 1, 2024 |

CPP Payments: How Much Will You Receive From Canada Pension Plan

Canada Pension Plan (CPP) benefits can make up a key portion of your income in retirement. Individuals receiving the maximum CPP payments at age 65 can expect to collect $16,375.20 per year ($1,364.60 per month) in benefits.

The amount of your CPP payments depends on two factors: how much you contributed, and how long you made contributions between ages 18 and 65. Most don’t receive the maximum benefit. In fact, the average amount for new CPP beneficiaries is just $9,983.04 per year (as of January 2024).

CPP Payments 2024

The table below shows the monthly maximum CPP payment amounts for 2024, along with the average amount for new beneficiaries:

Type of pension or benefitAverage amount for new CPP beneficiaries (Jan 2024)Maximum payment amount (2024)
Retirement pension (at age 65)$831.92$1,364.60
Disability benefit$1,176.98$1,606.78
Survivor's pension - younger than 65$524.68$739.31
Survivor's pension - 65 and older$326.87$818.76
Death benefit (one-time payment)$2,500$2,500
Combined benefits
Combined survivor's and retirement pension (at age 65)$999.54$1,375.41
Combined survivor's pension and disability benefit$1,286.98$1,613.54

Now, you may not have a hot clue how much CPP you will receive in retirement, and that’s okay.

The good news is that the government does this calculation for you on an ongoing basis. This means that you can find out how much money the government would give you today, if you were already eligible to receive CPP. This information is available on your Canada Pension Plan Statement of Contribution. You can get your Statement of Contribution by logging into your My Service Canada Account, which – if you bank online with any of the major banks – is immediate.

Related: CRA My Account – How to check your tax information online

If you’d prefer to send your personal information by mail you can request a paper copy of your Statement of Contribution sent to you by calling 1.877.454.4051, or by printing out an Application for a Statement of Contributions from the Service Canada Website.

Note that the information available to you on your CPP Statement of Contribution may not reflect your actual CPP payments. That’s because it doesn’t factor in several variables that might affect the amount you’re entitled to receive (such as the child-rearing drop-out provision). The statement also assumes that you’re 65 today, which means that later years of higher or lower income that will affect the average lifetime earnings upon which your pension is based aren’t taken into consideration.

CPP is Indexed to Inflation

Canada Pension Plan (CPP) rate increases are calculated once a year using the Consumer Price Index (CPI) All-Items Index. The increases come into effect each January, and are legislated so that benefits keep up with the cost of living. The rate increase is the percentage change from one 12-month period to the previous 12-month period.

CPP payments were increased by 4.8% in January 2024, based on the average CPI from November 2022 to October 2023, divided by the average CPI from November 2021 to October 2022.

Note that if cost of living decreased over the 12-month period, the CPP payment amounts would not decrease, they’d stay at the same level as the previous year.

CPP Payment Dates

CPP payment dates are scheduled on a recurring basis a few days before the end of the month. This includes the CPP retirement pension and disability, children’s and survivor benefits. If you have signed up for direct deposit, payments will be automatically deposited in your bank account on these dates:

All CPP payment dates 2024

  • January 29, 2024
  • February 27, 2024
  • March 26, 2024
  • April 26, 2024
  • May 29, 2024
  • June 26, 2024
  • July 29, 2024
  • August 28, 2024
  • September 25, 2024
  • October 29, 2024
  • November 27, 2024
  • December 20, 2024

Why Don’t I Receive The CPP Maximum?

Only 6% of CPP recipients receive the maximum payment amount, according to Employment and Social Development Canada. The average recipient receives about 56% of the CPP maximum. With that in mind, it’s best to lower your CPP expectations when calculating your potential retirement income.

Why don’t more people receive the maximum? Well, because it requires 39 years of CPP contributions at the maximum level to get the biggest possible benefit in retirement. That means you need a salary that meets or exceeds the yearly maximum annual pensionable earnings threshold, which in 2024 is $68,500.

Note that for the first time in 2024 there is a new Year’s Additional Maximum Pensionable Earnings (YAMPE) as part of the enhanced CPP that is being phased in over two years. This means Canadians will pay an additional 4% on the earnings between $68,500 to $73,200.

  • Year       YMPE
  • 2024      $68,500 
  • 2023      $66,600
  • 2022      $64,900
  • 2021      $61,600
  • 2020      $58,700
  • 2019      $57,400
  • 2018      $55,900
  • 2017      $55,300
  • 2016      $54,900
  • 2015      $53,600
  • 2014      $52,500
  • 2013      $51,100

Plenty of variables affect your ability to earn the maximum CPP benefits. Maybe you joined the work force late, dropped out for a period of time, or retired early.

Related: When Should Early Retirees Take CPP?

Low income earners may not hit the YMPE level often enough to get the highest possible CPP retirement benefit. Business owners who choose to pay themselves dividends don’t need to contribute to CPP, but that means they won’t be eligible to receive benefits either.

When To Take CPP?

Perhaps the most common question about CPP is when to take it. The standard age to take CPP is at age 65. But, Service Canada may proactively send out a notice a few months before your 60th birthday advising you that you’re eligible to apply for CPP and giving you an estimate of your expected CPP payments.

You can take a reduced CPP payment starting as early as age 60. If you do elect to take CPP early, you’ll receive 0.6% less for every month you receive it before age 65. That means, for those taking CPP at age 60, a reduction in their CPP payments by 36%. Reductions aside, there could be good reasons to take CPP early – namely if you need the income sooner than 65, or if you expect to have a reduced life expectancy.

Conversely, you can enhance your CPP payments by deferring your pension up until age 70. The advantage of waiting is you’ll receive a 0.7% increase for every month you defer CPP past age 65. Taking CPP at age 70 results in a 42% enhancement to your pension. The biggest reason to defer CPP is to protect against longevity risk – the risk of outliving your money. The trade-off is using your own personal savings to tide you over until the enhanced CPP payments kick-in later in life.

Note there is no benefit to defer CPP beyond age 70, so get your CPP application in on time to avoid delays.

Final Summary

CPP is a complicated system but one that is crucial to retirement planning for many Canadians. It’s important to understand how much CPP you will receive in retirement, and to know how difficult it is to receive the maximum CPP payments. Most CPP beneficiaries receive much less than the maximum, with the average between 55% and 60% – so that’s good to know going into your retirement income planning.

You can find out an estimate of your CPP benefits by looking at your Statement of Contribution online at your My Service Canada Account, or request a paper copy by calling Service Canada.

CPP payments are indexed to inflation, with the latest increase going up by 4.8% in 2024. CPP payment dates are scheduled toward the end of every month and automatically deposited into your bank.

Finally, a big consideration is when to take CPP and how the payments fit into your retirement plan. Do you expect to live a long life? Will you work until age 65? Do you have sufficient personal savings to last until your CPP payments kick-in? Will you take CPP at age 65, or elect to take your pension earlier or later?

Readers: How does CPP fit into your retirement income plan?

3 Reasons To Take CPP At Age 60

By Robb Engen | April 30, 2024 |

3 Reasons To Take CPP At Age 60

It’s generally not wise to voluntarily take up to a 36% reduction in income, especially if that income is paid for life. But that’s exactly what happens when retirees choose to take CPP at age 60.

I’m a big proponent of delaying CPP up to age 70 to help protect against longevity risk and enhance your monthly pension benefit in retirement. Only a small percentage of retirees do so, however, as many prefer to take CPP as soon as they’re eligible.

Why Take CPP at Age 60?

Taking CPP early may not be the most optimal financial decision but there are a few cases where it can make sense. Here are three reasons to take CPP at age 60:

1). You Need to Eat and Pay the Bills

Maybe you were laid off in the latter stages of your career and struggled to return to the workforce, or you had to retire early due to poor physical health. Whatever the case, you’re about to turn 60 and need to build an income stream.

Simply put, without sufficient income or personal savings to carry you through your 60s you may have no choice but to take CPP as early as possible.

The earliest you can take your CPP benefits is one month after your 60th birthday. Doing so means a 36% permanent reduction in your monthly benefit, but that’s still money in your pocket today.

The maximum payment amount for taking CPP at age 65 is $16,375.20 per year (2024). That amount would be reduced to $10,480.13 per year if you elect to take CPP at 60.

Taking that extra $10,000 at age 60 could mean the difference between meeting your retirement income goals or not, and that needs to be weighed against having to wait five years for an extra $5,900 (or so) a year.

Finally, if you’re sure that you will be eligible for the Guaranteed Income Supplement (GIS) once you reach 65, it’s generally a good idea to take CPP at age 60.

2). You Have a Reduced Life Expectancy

The biggest mystery in retirement planning is that we don’t know how long our money needs to last because we don’t know when we’ll die.

By age 60 you may have some idea. Whether it’s genetics, poor health, or the results from your 23andMe test, if you have any reason to suspect a shortened life expectancy then taking CPP at 60 can make good financial sense.

Understand your breakeven point for taking CPP early. For instance, you’ll be ahead financially if you take CPP at age 60 and don’t live past age 69. If you make it to 85, then the optimal age to take CPP is 69.

For context, a 60-year-old Canadian, on average, can expect to live another 25 years. So if you’re playing the averages then it’s best to delay CPP.

Lastly, if you’re thinking about taking CPP early because of poor health, you should apply for a CPP disability pension instead. If approved, the CPP disability amount will always be higher than a retirement pension and it will convert to a full retirement pension at 65.

3.) You Have No Contributions from age 55 to 60

Did you retire at age 55? Or maybe leave your career as a salaried employee to start a business in your fifties? Business owners can choose to pay themselves dividends rather than a salary, and therefore would not have to make CPP contributions. How do those years of zero contributions affect your CPP retirement benefit?

Related: When Should Early Retirees Take CPP?

When you take CPP at 60, your benefits are based on your best 35 years of earnings, rather than your best 39 years of earnings if you were to take it at 65. Depending on your earnings from age 18 to 54, your CPP payments might still be close to the maximum if you take it at age 60, but it will definitely be reduced if you wait until age 65.

Two reasons not to take CPP at age 60

Forget the notion of taking CPP early and investing. This idea, likely brought to you by your friendly neighbourhood financial sales person advisor, sounds compelling in theory but can be a disaster in practice.

Remember, the CPP is taxable income so you won’t be able to invest the full amount unless it’s in an RRSP. Then take investment fees into account and consider how much will you need to earn to beat the guaranteed 7.2% return that comes with delaying CPP by a year?

No, it’s better to defer and receive a larger pension that’s guaranteed and inflation protected for life.

Finally, if you’re concerned about whether CPP will be around when it’s time to collect, or whether the government of the day will raid the fund to pay its debts, let’s put that idea to rest.

The Canada Pension Plan Investment Board (CPPIB) is independent of the CPP and run at arms length of federal and provincial governments. The fund has been audited by an independent actuary and found to be sustainable for at least the next 75 years (using conservative projections).

CPP will be there for you in retirement. The question is when do you plan to collect your benefits?

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