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If you’re getting close to retirement age in Canada, the decisions you make about your CPP (Canada Pension Plan) and OAS (Old Age Security) benefits will affect your income for the rest of your life. Getting the timing right could mean the difference between financial comfort and struggling to make ends meet.
You can start collecting CPP anywhere from age 60 to 70, but here’s what most people don’t realize: your choice is permanent and creates a ripple effect through your entire retirement.
Take it at 60? You’ll get 36% less each month for life. That might sound terrible, but it’s not always the wrong move. Maybe you’ve got health issues, or you simply can’t work anymore, or you need the money right now. In those situations, a smaller monthly payment is better than no payment at all.
Wait until 70? Your monthly cheque jumps by 42% compared to what you’d get at 65. For someone expecting to live into their 80s or 90s, this extra income becomes incredibly valuable, especially when healthcare costs start climbing.
The math usually works out like this: if you claim early versus waiting until 65, you’re basically betting against yourself living past 74-76. Most Canadians today will live well beyond that age, which is why waiting often pays off.
Here’s something that surprises many – you don’t have to take OAS at 65. You can wait until 70 and boost your monthly payment by 36%. Since you didn’t have to work to earn OAS (it’s based on how long you’ve lived in Canada), this feels like free money for waiting.
But there is a clawback called recovery tax. As of July 2025, if your income hit $90,997, the government starts taking back your OAS at the rate of 15c a dollar. Make $148,451 at 65 or $154,196 at 75 or over and they take it all back.
This creates an interesting opportunity. Let’s say you’re 65 and still working with a high income. Instead of taking OAS and losing it to the clawback, you could wait a few years until your income drops, then claim a higher monthly amount.
Your CPP calculation looks at your best 39 years of earnings. If you’ve got some low-earning or zero-income years in there, working longer might bump them out and increase your benefit. The system automatically drops your worst 17% of years, but only if you have better years to replace them with.
Couples need to think strategically here. Maybe the higher earner delays CPP to age 70 while the lower earner starts at 65. This gives you some income right away while maximising the bigger benefit for later.
Some provinces have their own programmes that kick in at specific ages. You’ll want to understand how these work with your federal benefits to avoid leaving money on the table.
Get your Statement of Contributions from Service Canada. This shows exactly what you can expect and helps you spot any mistakes or missing credits. Do this well before you turn 60.
Think about your whole financial picture. What other income will you have? How’s your health? How long did your parents live? These factors all matter for your decision.
If you’re married, remember that CPP pays survivor benefits. This makes maximizing the higher earner’s CPP even more important since it protects the surviving spouse.
The biggest mistake? Claiming CPP at 60 just because you can, without running the numbers. Yes, getting money now feels good, but you might be giving up $100,000 or more over your lifetime.
Another error: ignoring taxes. Sometimes taking benefits earlier makes sense if you’re in a low tax bracket now but expect to be in a higher bracket later when your RRSP becomes a RRIF and forces withdrawals.
These decisions are complicated and permanent. A good financial planner can run different scenarios and show you the long-term impact of each choice. When you’re talking about potentially tens of thousands of dollars difference over your retirement, professional advice pays for itself.
The bottom line: don’t rush these decisions. Take time to understand your options and how they fit with your specific situation.
See these federal sites for more information on CPP and OAS.
When thinking about retirement financial decisions you should always take independent, professional advice.
