Old Age Security (OAS) is Canada's largest pension program — most residents qualify automatically, and it starts at age 65 with no prior contribution required. But despite its apparent simplicity, there are important planning considerations that can mean thousands of dollars of difference in your retirement income.
What is OAS?
OAS is a monthly pension paid to Canadians aged 65+ who have lived in Canada for at least 10 years after age 18 (for partial pension) or 40 years (for full pension). Unlike CPP, OAS is not based on your work history or earnings — it's a universal benefit based primarily on Canadian residency.
You must apply for OAS — it does not start automatically. Apply 6–12 months before your 65th birthday through Service Canada or your My Service Canada Account.
How much will you receive?
| Age group | Monthly OAS payment (2025) | Increase vs age 65 |
|---|---|---|
| 65–74 | ~$727.67 | Baseline |
| 75+ | ~$800.44 | 10% increase automatically at 75 |
| Deferred to 70 | ~$1,031.67 | 36% higher (+0.6%/month for 60 months) |
OAS payments are indexed quarterly to the Consumer Price Index, so they keep pace with inflation over time.
The OAS clawback (recovery tax)
If your net income exceeds $90,997 (2025 threshold), the government begins clawing back your OAS at a rate of 15 cents for every dollar above that threshold. The clawback is complete — OAS is fully repaid — once income reaches approximately $148,000.
Income sources that count toward the clawback threshold:
- RRSP and RRIF withdrawals (fully included)
- Employment and self-employment income
- Investment income — interest, dividends, capital gains
- CPP and pension income
- Does NOT include: TFSA withdrawals (this is a major advantage of the TFSA in retirement)
Clawback example
Your net income is $110,000. The excess over $90,997 is $19,003. Clawback = 15% × $19,003 = $2,850 of OAS repaid. If your full OAS benefit is $8,732/year, you keep approximately $5,882/year.
The benefit of deferring OAS to 70
Like CPP, OAS can be deferred past age 65 — increasing by 0.6% for every month deferred, for a maximum increase of 36% at age 70. This can be an excellent strategy if:
- You're still working at 65 and your income is near or above the clawback threshold — deferring OAS avoids having it clawed back anyway
- You have sufficient RRSP, TFSA, or pension income to fund your early retirement years without OAS
- You expect to live a long life — the break-even point for deferring from 65 to 70 is approximately age 84
The Guaranteed Income Supplement (GIS)
The GIS is an additional non-taxable benefit for low-income OAS recipients. If your annual income (excluding OAS) is below approximately $21,000 (single) or $28,000 (couple), you may qualify. GIS can add $200–$1,000/month depending on your income. Importantly:
- GIS is not automatic — you must apply and renew annually
- GIS is reduced by $0.50 for every $1 of income above the threshold (a very high effective tax rate)
- RRSP withdrawals and pension income count against GIS; TFSA withdrawals do not
- For lower-income retirees, maximizing TFSA (not RRSP) preserves GIS eligibility
Carrie's takeaway: OAS planning looks simple on the surface but has real complexity once you factor in clawback avoidance, deferral decisions, GIS eligibility, and income-splitting strategies. A short conversation with Carrie can identify whether you're positioned to maximize your OAS and avoid unnecessary clawbacks.
Carrie Wang
Carrie is the founder of Seven Lakes Financial Services Inc. and a Sun Life advisor serving clients across Ontario and Saskatchewan. She specializes in retirement, estate, and investment planning, with a warm, personalized approach. She is fluent in English, Mandarin, and Taiwanese.