When should you begin CPP and OAS?

Published October 12, 2022
 Couple on a couch

Michael Callahan, CFP®, CIM® - Advice and Planning Strategist

Canada Pension Plan (CPP) and Old Age Security (OAS) retirement benefits both have a normal start date of age 65. Yet, CPP benefits can begin as early as age 60, or as late as age 70, while OAS can begin anywhere from age 65 to 70. When should you start receiving your CPP and OAS benefits?

There are many different approaches and angles to consider. Early might make sense from one perspective, while late might make sense from another perspective. Which is correct? While it’s often a matter of personal preference, it’s important to consider your own unique circumstances when making this decision.

Timing considerations

When deciding when to start receiving your CPP and OAS retirement benefits, consider the following factors when making your decision:

  • What is your current tax rate? CPP and OAS are both fully taxable. If you’re already in a high tax bracket in the current year, it may be beneficial to defer your CPP and OAS to a later year.
  • What are your other sources of retirement income? For some, government pension income is a necessity when employment income ceases, while others may have additional options available.
  • Are you subject to OAS claw back? OAS is income-tested, and subject to a 15% recovery tax. If you have a higher income in the current year, deferring OAS may help minimize claw back.
  • Are you in good health? If you have a shortened life expectancy, it may make sense to start CPP and OAS benefits earlier rather than later, in order to maximize the overall benefit received.
  • What is your risk tolerance and current asset allocation? If you have a low risk tolerance, deferring CPP and OAS can offer a better return than typical GIC (or similar) returns.
  • What is your lifestyle? There is tremendous value in having additional income while you’re still young and healthy enough to enjoy it and make good use of it – it’s not just about the math.

Bottom Line

Determining the optimal time to begin your CPP and OAS benefits is not a one-size-fits-all type decision. Sound advice for one person may be completely inappropriate for another. Consider the items indicated above, and any other relevant considerations in your own personal situation, as you work with your Edward Jones advisor to determine the best time to start your CPP and OAS retirement benefits.