Planning for retirement involves more than just saving—it’s about understanding how to make the most of government benefits like Old Age Security (OAS). In 2025, Canadian seniors can maximize their OAS payments through strategic planning, deferrals, and careful income management.
This guide breaks down actionable tips to help you increase your OAS benefits and secure financial stability in retirement.
Key Facts About OAS
| Feature | Details |
|---|---|
| Eligibility | Canadian citizens or legal residents aged 65+ |
| Full Benefit Eligibility | 40 years of Canadian residency after age 18 |
| Deferral Increase | 0.6% per month delayed (up to 36% by age 70) |
| Clawback Threshold | $87,397 annual income (2024 threshold) |
| Additional Benefits | Guaranteed Income Supplement (GIS) for low-income seniors |
| Taxable | OAS is taxable income |
Why Maximize OAS Benefits?
As living costs rise, maximizing your OAS benefits can provide critical financial relief. Here’s why it’s worth it:
- Retirement Security: Higher OAS payments can offset gaps in private savings or pension plans.
- Flexibility: Increased payments reduce reliance on other income sources.
- Inflation Protection: Deferring payments can help your income keep pace with rising costs.
Steps to Maximize OAS Benefits
1. Ensure Full Eligibility
To receive the maximum OAS benefit, you need at least 40 years of Canadian residency after age 18.
- What If You Don’t Qualify? If you’ve lived in Canada for fewer years, your OAS will be pro-rated based on your residency duration. For instance, 30 years in Canada equals 75% of the maximum benefit.
- How to Fix It: If feasible, extend your stay in Canada to meet the full residency requirement.
2. Defer OAS Payments
Delaying your OAS beyond age 65 increases your monthly payments by 0.6% for each month deferred, up to a maximum of 36% by age 70.
| Age to Start OAS | Monthly Payment Increase |
|---|---|
| 65 | Base amount |
| 66 | 7.2% higher |
| 67 | 14.4% higher |
| 70 | 36% higher |
For example, a $1,000 monthly payment at age 65 becomes $1,360 if deferred to age 70. This option is ideal for those in good health or with other income sources.
3. Avoid the OAS Clawback
The OAS clawback reduces your benefits if your net income exceeds $87,397 (2024 threshold). Here’s how to minimize it:
- Income Splitting: Share pension income with your spouse to reduce taxable income.
- Use a TFSA: Withdrawals from Tax-Free Savings Accounts don’t count as income.
- RRSP Contributions: Contribute to Registered Retirement Savings Plans to lower taxable income in high-earning years.
4. Understand GIS Eligibility
The Guaranteed Income Supplement (GIS) is a non-taxable benefit for low-income seniors receiving OAS. If your income is below certain thresholds, GIS can supplement your OAS payments.
- Eligibility: Income thresholds vary depending on your marital status and living arrangement.
- How to Apply: GIS applications are submitted through My Service Canada Account.
5. Plan for Taxes on OAS
Since OAS is taxable, planning can reduce tax burdens:
- Tax Credits for Seniors: Use credits like the Age Amount or Pension Income Tax Credit to lower taxable income.
- Work with a Financial Advisor: Tailor your income sources to minimize taxes on OAS.
Example: Maximizing OAS in 2025
| Scenario | Monthly Payment |
|---|---|
| Starts OAS at 65 | $1,235 |
| Defers OAS to 70 | $1,679 (36% increase) |
| Clawback Avoidance Strategies | Retains full benefit |
| Adds GIS (if eligible) | Up to $1,072 more |
Tackling Inflation
Inflation eats into the value of fixed income, including OAS. While OAS adjusts quarterly for inflation, additional steps can help:
- Invest in Inflation-Protected Assets: Government bonds or dividend stocks can hedge against inflation.
- Regular Budget Reviews: Adapt your spending to account for rising prices.
