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Delaying CPP and OAS to age 70: Is it worth the wait?


OAS gets a 10% boost for those aged 75+

In addition to that simple benefit-boosting tactic, Ottawa further boosts benefits with regular inflation adjustments and rare budget-mandated increases. The 2021 Canadian federal budget promised to boost OAS payments for seniors age 75 and older. And in July of 2022, it delivered on that promise, with a 10% increase, plus an additional quarterly inflation adjustment. 

The National Institute for Ageing (NIA) confirmed in a news release that the increased OAS payments for Canadians aged 75 or older were the first permanent increase in almost 50 years. The NIA encourages retirees to defer their OAS benefits

Is it worth waiting for CPP and OAS until age 70?

The NIA’s director of financial security research, Bonnie-Jeanne MacDonald and associate fellow Doug Chandler suggest that the best way for retirees to maximize these increases is to defer OAS benefits for as long as possible, by working longer or drawing on savings in the interim.

By now, most retirees know they can boost CPP benefits by 42% by delaying the onset of benefits from age 65 to 70, or 0.7% for each month of deferral after 65.

It’s less known that a similar mechanism works for OAS. Unlike CPP, which can start as early as age 60, OAS is not available before age 65. By delaying OAS by five years to the age of 70, you can boost final payments by 36%, or 0.6% more for each month you delay after 65.

The post-75 10% boost makes delaying OAS even more enticing. Before the increase, the NIA said average Canadians would “leave on the table” $10,000 by not delaying; but after this adjustment for pensioners aged 75 and older, they would now lose out on $13,000 by taking OAS at 65 instead of 70. 

Delaying CPP vs delaying OAS

Retired actuary and retirement expert Malcolm Hamilton tells me this doesn’t mean deferring OAS is better than delaying CPP. 

“The base OAS benefit increases, from one year to the next, at the rate of increase in the CPI,” he says. (CPI stands for consumer price index, which is used to measure inflation.) “The base CPP pension—payable to those who draw pensions at 65—increases from one year to the next at the rate of growth in the YMPE, which tracks wages, not prices, and which should increase at least 1.2% per annum faster than the OAS pension.” (YMPE stands for year’s maximum pensionable earnings, which is set by the federal government.) He further explains that, once you start to receive OAS or CPP, “the subsequent increases both track the CPI, but OAS is adjusted quarterly while CPP is adjusted annually.”


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