When should I start collecting OAS?

By ATB Wealth 2 February 2024 4 min read

Move on to your next great adventure confidently, knowing when you should start collecting your Canada Pension Plan (CPP) and Old Age Security (OAS)


What is the maximum OAS pension amount?

If you start payments at age 65 and meet the residency requirements for a full OAS pension, you're entitled to $713.34 as of January 2024. Benefits are adjusted quarterly and indexed to the Canadian Consumer Price Index (CPI).


When can I start receiving OAS?

Your OAS pension can start as early as the month following your 65th birthday. You can defer collecting your OAS pension to when you turn age 70. Each month you defer increases the benefit by 0.6%.

For example, if you defer collecting OAS to when you're age 70, your benefit amount will increase by 36% over the amount you'd receive when you're 65.


How is OAS income taxed?

OAS benefits are considered taxable income. If you receive an OAS pension, you will get a T4 (OAS) slip from Employment and Social Development Canada.

Here are some more details:

  • Benefits cannot be split with a spouse on your tax return.
  • Benefits are not eligible for the pension income amount tax credit.
  • OAS benefits are subject to a pension recovery tax.
    • Your OAS pension is partially clawed back (reduced) if your income exceeds $90,997. The reduction is calculated at a rate of 15 cents for every dollar above the threshold. If your income exceeds $148,065, you will stop receiving OAS benefits.
    • For those aged 75 and over, the upper threshold is $153,771.
    • If a 65-year-old applicant for OAS in 2024 has income of $100,000, a clawback of 15% of the difference between $100,000 and the threshold limit of $90,997 would apply, ($100,000-$90,997) x 15% = $1,350.45 annual clawback. If we assume this applicant was otherwise eligible for the maximum OAS of $8,560.08/year, then their net benefit would be reduced by $1,350.45 to $7,209.63/year, under the pension recovery tax.


When should I start collecting OAS?

Everyone’s retirement looks different. When you start collecting OAS is unique to your life, and can depend on your current and future income. Meeting with an ATB Wealth Advisor today can have you feeling confident that you’re prepared now and for the decades to come.

Here are some examples of when you may wish to defer collecting benefits:

  • You're still working at age 65 and expect to earn more than the minimum income recovery threshold. A deferral may make sense if you expect your OAS benefits to be partially or fully clawed back due to earned income and you anticipate a future reduction in your total income.
  • You anticipate a high level of income around age 65 due to the planned sale of an asset, property, or business. A deferral may make sense if the taxable proceeds are expected to exceed the income recovery threshold.


Here are some examples of situations when you may not wish to defer:

  • You anticipate a shortened life expectancy. Unlike CPP, there are no survivor benefits for OAS.
  • You expect high levels of income after age 70.
    • For example, someone with significant RRSP balances may not want to defer. RRSPs must be converted to RRIFs by the end of December of the year you turn 71 and minimum payments commence at age 72. If the anticipated annual RRIF income plus other income, such as CPP or investment income, is expected to exceed the threshold, a deferral might not make sense.
    • Married couples or those in a common-law relationship may wish to consider available income splitting options to reduce OAS clawbacks and maximize after-tax retirement income.


How do I defer collecting my OAS?

If you received an automatic enrollment letter, then you have two options to defer: online by accessing your My Service Canada account, or via a letter mailed to Service Canada.

If you're already receiving OAS benefits, you can cancel them only if you've been receiving benefits for less than six months. You'll be required to repay any benefits you received up to the cancellation.


What if my situation changes after I have chosen to defer collecting OAS benefits?

If you deferred collecting your OAS and later decide that you want to start earlier, you can request retroactive payments for a maximum of 11 months, or back to the month following your 65th birthday, whichever period is shortest.


What happens to my OAS on death?

OAS does not have a survivor benefit. OAS benefits must be cancelled at the time of death. There's an allowance for surviving spouses or common-law partners between ages 60 and 64 only that have income under $29,112 (2024).


Your life is rich and complex—so is the process of deciding how OAS can work best for you. An ATB Wealth advisor can help you create a personal retirement plan to ensure you get the most from your government benefits. Contact us today to speak with one of our experts.


Photo credit: Travel Alberta

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