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Old Age Security: How to get it and keep it

Old Age Security: How to get it and keep it

Posted on: April 18, 2012
Author: Staff

Accessible government benefit can provide a steady source of retirement income, but beware of the clawback.

Old Age Security (OAS) is the one source of retirement income that almost all Canadians can count on. Although there are some changes coming to OAS age eligibility, the requirements will remain quite simple.

Currently, the eligible age for OAS is 65. You have to apply to take advantage of the benefit, and the government recommends that you submit your application six months before your 65th birthday. It pays to apply early, ideally before your 66th birthday, because back payments are capped at 11 months.

Starting on April 1, 2023, the eligibility age for OAS and Guaranteed Income Supplement (GIS) will gradually increase from 65 to 67. There will be a six-year phase-in period from 2023 to 2029.

OAS eligibility changes are described in the chart below:

Date of birth OAS Eligibility
Born before March 31, 1958 Eligible for OAS at 65 (no change)
Born between April 1, 1958 – January 31, 1962 Eligible for OAS between the ages of 65 – 67, depending on your actual birthday
Born after February 1, 1962 Eligible for OAS at 67

With a maximum monthly benefit of $540.12 in 2012, OAS is a relatively small source of retirement income. Seniors with a very low income can receive additional benefits, such as the Guaranteed Income Supplement (GIS), through the OAS program.

Beware of the clawback

While OAS provides a basic income amount for retirees, what the government giveth, the government can taketh away. If your net income, including OAS and other retirement income, is above a certain level, some or all of your OAS benefits may need to be repaid—a regulation that is called the OAS clawback.

The clawback kicks in when a retiree's net income reaches $69,562. At this point, each dollar of extra income reduces OAS payments by 15 cents. When your net income reaches $112,772, OAS is eliminated.

Although OAS won't put huge dollars in your pocket, the extra money can come in handy. To maximize your payment, consider all your sources of retirement income and plan carefully to stay under the $69,562 threshold. If your spouse has a lower income, income splitting might help you achieve this.

To get started, download your OAS application kit or pick one up from a Service Canada Centre. For help planning your retirement income, contact an ATB Investor Services Advisor at 1-888-282-3863.