The Old Age Security (OAS) is a federal pension program in Canada that provides a basic monthly income to eligible seniors. To be eligible for OAS, you must be 65 years of age or older and have lived in Canada for at least 10 years after the age of 18.
What is Old Age Security (OAS)?
The amount of the OAS pension is based on the recipient’s residency in Canada and is adjusted quarterly based on changes in the cost of living. The OAS pension is funded through general tax revenues and is one of the largest components of the Canadian retirement income system, along with the Canada Pension Plan (CPP) and Registered Retirement Savings Plans (RRSP). The purpose of the OAS program is to provide financial security to seniors and help reduce poverty among older Canadians.
For seniors with income below a certain threshold, OAS includes the Guaranteed Income Supplement (GIS).
How Much OAS Will You Get?
OAS payment amounts depend on factors like age, residency duration in Canada, and income. Regardless of marital status, if individual income falls below $129,260 annually, the maximum monthly OAS payment is $618.45 (figures for April to June 2021).
Single, widowed, or divorced individuals with income below $18,744, or couples with combined income below $44,928 where the partner doesn’t receive OAS, receive a maximum GIS payment of $923.71.
For couples where one partner receives full OAS and combined income is below $24,768, the maximum GIS payment is $556.04.
These figures are accurate for April to June 2021, with OAS benefits adjusted every three months based on the Consumer Price Index.
Delaying OAS until age 70 results in higher monthly payments.
Defer OAS to 70
Opting to defer OAS until age 70 can prove advantageous. Each year of delay results in a 7.2% increase in benefits, up to a maximum of 36% for those who start at age 70.
The maximum monthly OAS payment at age 65 (as of 2024) is $713.34, amounting to $8,560.08 annually. Deferring OAS until age 70 elevates the annual OAS pension to $11,641.71.
Delaying CPP and OAS enhances the guaranteed income stream throughout your lifetime, simultaneously diminishing risk of outliving your money.
Old Age Security (OAS) Payment Dates
OAS is disbursed monthly through direct deposit or cheque. Here is a list of the upcoming payment dates for 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
Paying Tax on OAS Payments
OAS benefits are taxable, necessitating reporting on annual income tax returns. Tax deductions can be arranged to manage tax liabilities. An OAS pension recovery tax, or clawback, applies if annual income surpasses the threshold ($79,845 in 2021).
When Will You Receive Your First OAS Payment
First OAS payments typically commence the month after turning 65, with applications accepted up to 11 months in advance.
Maximum Payments and Income Thresholds
The Old Age Security pension undergoes reviews in January, April, July, and October to incorporate adjustments in the cost of living, as indicated by the Consumer Price Index. Importantly, your monthly payment will not decrease even if there is a decrease in the cost of living.
If you are or will be 75 years old or older in June 2022, you will get an automatic 10% increase in your Old Age Security pension starting in July 2022.
| Age | Maximum Monthly Payment | 2022 Income |
|---|---|---|
| 65-74 | $713.34 | Less than $142,609 |
| 75+ | $784.67 | Less than $148,179 |
What is the OAS Clawback?
The OAS clawback becomes applicable when your net income surpasses $81,761 (2022), and you will have to repay part of your entire Old Age Security pension. Old Age Security experiences a reduction for individuals with higher income through a clawback or recovery provision. For each additional dollar of net income beyond $81,761, the maximum OAS pension is diminished by 15 cents.
Strategies to Help Minimize the OAS Clawback
- Pension Splitting: If their income is lower than yours, you can transfer 50% of your income to them
- Take OAS Later: You can opt not to begin receiving OAS until your older than 65, when your income is lower
- Withdraw Money from Your TFSA: You don’t pay tax on TFSA withdrawals and they aren’t included in your income
- Sell assets before you turn age 65: This helps you reduce large capital gains which will add to your income
- Younger Spouse’s Age RRIF Withdrawals: This helps you reduce the required annual withdrawal amount
- Reduce Dividends: Or hold them in a registered account
- Withdraw All RRSP Before 65: Taking money from them before age 65 could lower your income once you start collecting OAS
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