The retirement age in Canada is the age at which you can stop working and start receiving a pension from the government. However, the retirement age in Canada is not fixed, and you have some flexibility and options to choose when and how much you want to receive.
Canada Pension Plan (CPP)
The CPP is a retirement pension that is based on your earnings and contributions during your working years. You can start receiving CPP as early as age 60 or as late as age 70. The amount of CPP you can receive depends on how much and how long you have contributed, and the age you start receiving it. The maximum monthly payment for CPP is $1,306.57 in 2023. The average monthly payment for a new retirement age pension (at 65) in June 2023 was $772.71.
Old Age Security (OAS)
OAS is a universal pension that is available to all Canadian citizens and permanent residents who have lived in Canada for at least 10 years after the age of 18. The amount of OAS you can receive depends on how long you have lived in Canada and your income level. The maximum monthly payment for OAS is $707.68 from October to December 2023 and $778.45 from July to December 2022. However, if your income is higher than a certain threshold, you may have to repay part or all of your OAS pension. This is called the OAS recovery tax or clawback.
Retirement Age in Canada: 65 or 67?
The standard retirement age in Canada is 65, but you can start receiving CPP and OAS benefits as early as 60 or as late as 70. Your choice can affect the amount you receive. For the latest details, check with official sources or consult a financial advisor.
The government has proposed to gradually increase the OAS eligibility age from 65 to 67, starting in April 2023 and ending by January 2029. This means that if you were born after March 1958, you will have to wait longer to receive your OAS pension. The table below shows the OAS eligibility age based on your birth year.
| Birth Year | OAS Eligibility Age |
|---|---|
| 1958 | 65 years and 5 months |
| 1959 | 65 years and 11 months |
| 1960 | 66 years and 5 months |
| 1961 | 66 years and 11 months |
| 1962 or later | 67 years |
The government has also introduced a voluntary deferral option for OAS, which allows you to delay your OAS pension for up to 60 months after you turn 65. For every month you delay, your OAS pension will increase by 0.6%. However, after age 70, there is no advantage in delaying your OAS pension.
The CPP eligibility age remains unchanged at 65, but you can start receiving CPP benefits as early as 60 or as late as 70. The amount of CPP you can receive depends on how much and how long you have contributed and the age at which you start receiving it. For every month you receive CPP before age 65, your CPP pension will be reduced by 0.6%. For every month you delay CPP after age 65, your CPP pension will be increased by 0.7%.
Advantages and Disadvantages of Different Retirement Scenarios
There is no one-size-fits-all answer to when you should start receiving your retirement pension in Canada. It depends on your personal and financial situation, your goals, and your preferences. Here are some of the advantages and disadvantages of different retirement age scenarios.
Early Retirement Age (60)
If you start receiving your CPP and OAS benefits at age 60, you will have the following advantages:
- You will have more time to enjoy your retirement and pursue your hobbies and interests.
- You will have more flexibility and freedom to travel, volunteer, or work part-time.
- You will have a lower risk of outliving your savings, as you will receive your pension for a longer period.
However, you will also have the following disadvantages:
- You will receive a lower monthly payment from both CPP and OAS, as your pension will be reduced by 0.6% for every month you receive it early.
- You will have a higher risk of running out of savings, as you will have less time to accumulate and grow your retirement fund.
- You will have a higher tax burden, as your pension income will be added to your other income sources, such as employment income, investment income, or RRSP withdrawals.
Standard Retirement Age (65)
If you start receiving your CPP and OAS benefits at age 65, you will have the following advantages:
- You will receive the full amount of your CPP and OAS pension, without any reduction or increase.
- You will have more time to save and invest for your retirement, as you will have five more years of working and earning income.
- You will have a lower tax burden, as your pension income will be lower than if you start receiving it earlier or later.
However, you will also have the following disadvantages:
- You will have less time to enjoy your retirement and pursue your hobbies and interests.
- You will have less flexibility and freedom to travel, volunteer, or work part-time.
- You will have a higher risk of outliving your savings, as you will receive your pension for a shorter period.
Late Retirement Age (70)
If you start receiving your CPP and OAS benefits at age 70, you will have the following advantages:
- You will receive a higher monthly payment from both CPP and OAS, as your pension will be increased by 0.7% for every month you delay it.
- You will have a lower risk of running out of savings, as you will have more time to accumulate and grow your retirement fund.
- You will have a lower tax burden, as your pension income will be higher than your other income sources, such as employment income, investment income, or RRSP withdrawals.
However, you will also have the following disadvantages:
- You will have less time to enjoy your retirement and pursue your hobbies and interests.
- You will have less flexibility and freedom to travel, volunteer, or work part-time.
- You will have a higher risk of dying before or soon after you start receiving your pension, as you will have less years of life expectancy.
Conclusion
The retirement age in Canada is the age at which you can stop working and start receiving a pension from the government. However, the retirement age in Canada is not fixed, and you have some flexibility and options to choose when and how much you want to receive.
FAQ
Q: What is the retirement age in Canada?
A: The retirement age in Canada is the age at which you are eligible to receive the Old Age Security (OAS) pension, which is a monthly benefit that replaces part of your income when you retire. The current retirement age in Canada is 65, but it will gradually increase to 67 by 20291.
Q: When can I get the Canada Pension Plan (CPP) retirement pension?
A: You can apply for and receive a full CPP retirement pension at age 65, or receive it as early as age 60 with a reduction, or as late as age 70 with an increase. The CPP retirement pension is a monthly, taxable benefit that replaces part of your income when you retire, based on your contributions to the CPP.
Q: How much will I get from OAS and CPP when I retire?
A: The amount of OAS and CPP benefits that you will receive depends on several factors, such as your age, your income, your marital status, your residency, and your contribution history. The maximum OAS benefit for 2023 is $626.49 per month, and the maximum CPP benefit for 2023 is $1,203.75 per month. However, most people receive less than the maximum amounts.
Q: Can I work while receiving OAS and CPP benefits?
A: Yes, you can work while receiving OAS and CPP benefits, without affecting the amount of your benefits. However, your income may be subject to taxes and clawbacks, depending on how much you earn and the type of benefits you receive. For example, if your net income exceeds $79,845 in 2023, you will have to repay part or all of your OAS benefits at a rate of 15%. If you work while receiving your CPP retirement pension and are under age 70, you can also make CPP contributions and increase your retirement income with the post-retirement benefit.
Q: How can I increase my OAS and CPP benefits?
A: There are several ways to increase your OAS and CPP benefits, such as delaying your application, working longer, making voluntary contributions, splitting your pension with your spouse, and applying for other benefits. For example, you can increase your OAS benefit by 0.6% for every month that you delay receiving it after age 65, up to a maximum of 36% at age 70. You can also increase your CPP benefit by 0.7% for every month that you delay receiving it after age 65, up to a maximum of 42% at age 70.
Q: What is the difference between OAS and CPP?
A: OAS and CPP are two different public pension programs that provide income support to seniors in Canada. OAS is a universal program that is funded by general tax revenues and does not require contributions from workers. CPP is a contributory program that is funded by payroll deductions and employer matching contributions from workers and self-employed individuals. OAS is based on your residency and legal status in Canada, while CPP is based on your earnings and contributions to the CPP.
Q: How do I apply for OAS and CPP benefits?
A: You can apply for OAS and CPP benefits online, by mail, or in person at a Service Canada office. You should apply for OAS benefits at least six months before you want to start receiving them, and for CPP benefits at least four months before you want to start receiving them. You will need to provide some personal information and documents, such as your Social Insurance Number, your birth certificate, your proof of citizenship or residency, and your banking information.
Q: What are the other benefits that I can get from OAS and CPP?
A: Besides the basic OAS and CPP retirement pensions, you may also be eligible for other benefits, such as the Guaranteed Income Supplement (GIS), the Allowance, the Allowance for the Survivor, the CPP disability benefit, the CPP survivor’s pension, the CPP children’s benefit, and the CPP death benefit. These benefits are designed to provide additional income support to low-income seniors, spouses, survivors, and dependents of CPP contributors.
Q: How do I check the status of my OAS and CPP applications and payments?
A: You can check the status of your OAS and CPP applications and payments online, by phone, or by mail. You can use the My Service Canada Account (MSCA) to access your personal information, view your application status, update your banking information, print your tax slips, and more. You can also call the Service Canada automated telephone service at 1-800-277-9914 to get information about your OAS and CPP benefits. You can also write to Service Canada and request a statement of your OAS and CPP benefits.
Q: How do I report a change in my situation to OAS and CPP?
A: You must report any change in your situation that may affect your eligibility or amount of your OAS and CPP benefits, such as your income, your marital status, your address, your residency, your citizenship, your death, or your incarceration. You can report a change online, by phone, or by mail. You can use the MSCA to update your personal information, such as your address, your marital status, and your banking information. You can also call the Service Canada automated telephone service at 1-800-277-9914 to report a change. You can also write to Service Canada and provide the details of the change and the supporting documents.