Deciding when to start taking your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits is one of the most important financial decisions you’ll make in retirement planning. The right timing can significantly impact your income, taxes, and overall financial security in your later years. While many Canadians start collecting benefits as soon as they’re eligible, waiting can sometimes pay off—literally.
This article explains how CPP and OAS work, what factors to consider when choosing your start date, and how to make a decision that fits your personal circumstances.
Understanding CPP and OAS
Before diving into timing, it’s helpful to understand what these two programs are designed to do.
The Canada Pension Plan (CPP) is a contributory program. You pay into it during your working years, and your retirement benefit depends on how much you’ve contributed and for how long. CPP can provide a steady stream of income for life, indexed to inflation.
You can begin receiving CPP as early as age 60 or as late as age 70. The standard age to start is 65, but starting earlier or later changes your monthly benefit amount:
- Starting early (before 65): Your benefit is reduced by 0.6% for each month before your 65th birthday — a 36% reduction if you start at 60.
- Delaying (after 65): Your benefit increases by 0.7% per month delayed — up to 42% more if you start at 70.
Old Age Security (OAS) is a government-funded pension, available to most Canadians aged 65 or older who have lived in the country for at least 10 years after age 18. Unlike CPP, you don’t have to contribute to OAS. The amount you receive depends on how long you’ve lived in Canada, and it’s adjusted quarterly for inflation.
You can start OAS anytime between 65 and 70. For every month you delay after 65, your payment increases by 0.6%, or 7.2% per year, up to a maximum 36% increase if you start at 70.
Factors to Consider When Deciding
The “best” age to start CPP or OAS depends on several personal and financial factors. There’s no one-size-fits-all answer, but here are the main considerations:
1. Your Life Expectancy and Health
If you’re in good health and expect to live well into your 80s or 90s, delaying CPP or OAS often makes financial sense. The longer you live, the more time you’ll have to benefit from higher monthly payments.
On the other hand, if you have health concerns or a family history of shorter life expectancy, starting earlier may be the better option. It allows you to collect benefits while you’re still active and able to enjoy them.
2. Your Current Income Needs
If you retire early and need income to cover expenses, taking CPP or OAS sooner can help bridge the gap before other sources of income kick in.
However, if you’re still working or have sufficient savings or other income sources, delaying can boost your future payments — effectively giving you a guaranteed, inflation-protected “return” on waiting.
3. Employment and Taxes
If you’re still earning income from employment or self-employment, adding CPP or OAS could push you into a higher tax bracket. It might make sense to delay benefits until your income drops in retirement to reduce your tax bill.
Additionally, OAS benefits are subject to a clawback if your net income exceeds a certain threshold ($90,997 in 2025). Delaying OAS until after you stop working can help you avoid or reduce that clawback.
4. Spousal and Survivor Considerations
If you have a spouse or common-law partner, coordinating when each of you starts CPP and OAS can optimize your combined income. For example, if one spouse expects to live longer, delaying that person’s CPP might ensure more income stability for the survivor.
5. Inflation Protection and Longevity Risk
Both CPP and OAS are indexed to inflation, meaning their value keeps pace with the cost of living. They also pay for life, so delaying these benefits acts as a hedge against longevity risk — the risk of outliving your savings. A higher lifetime benefit can reduce the pressure on your investment portfolio later in life.
The Financial Impact of Waiting
The increases from delaying CPP or OAS can be substantial. For example, if your CPP at 65 would be $1,000 per month, waiting until 70 would raise it to $1,420 — a 42% boost. Over a long retirement, this can add up to tens of thousands of dollars in extra income.
However, the trade-off is that you’ll receive fewer payments overall. The “break-even age” — the age at which delaying pays off — is typically around 74–76 for CPP and slightly earlier for OAS. If you live beyond that, you’ll come out ahead by waiting.
A Balanced Approach
Some retirees take a hybrid strategy. For instance, they might start CPP at 62 to cover expenses but delay OAS until 68 or 70 for higher future payments. Others draw from their RRSPs or savings in their 60s and delay both pensions, effectively converting personal savings into a higher guaranteed lifetime income later.
This strategy can also reduce the risk of OAS clawbacks and lower required minimum withdrawals from RRIFs later, providing both income stability and tax efficiency.
Getting Professional Advice
Because the decision interacts with your overall retirement plan — including taxes, savings, and estate goals — it’s often wise to consult a financial planner. They can run personalized projections showing the long-term impact of different start ages, taking into account your health, risk tolerance, and financial situation.
The Bottom Line
There’s no universal right age to start CPP and OAS. The best choice depends on your unique circumstances — your health, income needs, work status, and personal priorities.
- If you need the income now or have a shorter life expectancy, taking benefits early can make sense.
- If you’re financially secure and expect a long life, delaying can provide valuable, guaranteed increases to your future income.
Ultimately, think of CPP and OAS as foundational pieces of your retirement income puzzle. The goal isn’t just to maximize dollars — it’s to ensure lifelong financial comfort and peace of mind.