CPP & OAS

When Should You Take CPP and OAS? A Canadian Timing Guide

There is no single right age. CPP can start between 60 and 70, and waiting until 70 instead of 65 raises it about 42%. OAS starts at 65 and can be deferred to 70 for roughly 36% more. The right timing depends on your health, your other income, taxes, and whether you have a spouse.

Most people ask, "What age gives me the most money from CPP and OAS?" That is the wrong question. The right one is, "What timing gives me the life I want, with the least worry, after taxes and over my whole retirement?" Those are not the same thing.

The honest answer is that it depends, and what it depends on is knowable. Your health and family history, your other sources of income, your tax bracket now versus later, and whether you are planning as one person or as a couple all push the decision in different directions. Below is how each piece moves the math, and where we would model it on screen until your own answer becomes clear.

When should you start CPP?

CPP can begin as early as 60 or as late as 70. Starting before 65 reduces it permanently by about 0.6% a month; waiting past 65 raises it about 0.7% a month, so age 70 pays roughly 42% more than 65. Taking it early makes sense if you need the income, expect a shorter life, or want to preserve other assets.

The case for starting early is rarely about getting the biggest cheque. It is about cash flow and choice. If you have stopped working at 60 and the alternative is drawing down an RRSP or selling investments in a down market, an early, smaller CPP can be the steadier source. Allan has written about taking CPP before 65 to pay down a mortgage, and the logic holds: a guaranteed, inflation-indexed payment can be worth more to you than its size on paper suggests.

The case for waiting is longevity insurance. CPP is one of the few incomes you cannot outlive and that keeps pace with inflation. If you are healthy, have a family history of long life, and have other money to live on in your sixties, deferring to 70 buys you a larger guaranteed base for the decades when you are least able to earn or manage a portfolio.

Between those poles sits most of the country. The break-even age, the point where waiting overtakes starting early, typically lands in the early-to-mid eighties, but a break-even calculation ignores risk, taxes, and how the rest of your plan behaves. That is why we never decide CPP timing in isolation.

Should you defer OAS to 70?

You can defer OAS past 65 for about 0.6% more per month, up to roughly 36% more at 70. Deferring can make sense if you are still working, have strong other income, or want a larger inflation-indexed payment later. There is no benefit to deferring past 70, and deferring while your income is low usually costs you.

OAS works differently from CPP in one way that matters: it is not based on what you contributed but on how long you have lived in Canada, and it is subject to a recovery tax once your net income passes a threshold that adjusts most years. That changes the deferral question. If you would lose part of your OAS to the clawback at 65 anyway because you are still earning, delaying it can let you collect more of it later when your income drops.

But deferral is not free. Every month you wait is a month you do not receive a payment you were entitled to, and you are betting on living long enough to come out ahead. If your income is modest, taking OAS at 65 and using it, rather than drawing harder on savings, is often the cleaner choice. There is also no reason to wait beyond 70, since the increase stops there.

OAS and CPP do not have to start on the same day. It is common to take one earlier and defer the other, depending on which lever does more for your particular income picture.

How does the OAS clawback change your drawdown plan?

Once your net income passes a threshold that adjusts most years, OAS is reduced by a recovery tax, and above an upper limit it disappears entirely. This makes the order you draw from your accounts, and the timing of RRSP withdrawals and CPP, part of the same decision. Smoothing income across years often protects more OAS than chasing the biggest single benefit.

The clawback is where timing stops being about CPP and OAS alone and becomes about your whole tax picture. Large RRSP or RRIF withdrawals, a capital gain from selling a property, or two pensions landing in the same year can push your net income over the line and quietly claw back OAS you assumed you would keep. How your net income is calculated for OAS is not always intuitive, which is why it surprises people.

This is also why drawdown order matters. For some retirees, drawing down RRSPs earlier, in the lower-income years before CPP and OAS begin, lowers the later income that would otherwise trigger the clawback. For others, the opposite is true. There is no universal rule, only your numbers, your account types, and the years in front of you.

The goal is rarely to avoid the clawback at all costs. It is to see the trade-off clearly: what you give up in flexibility or tax today versus what you keep in OAS tomorrow. That comparison is hard to hold in your head and easy to see side by side on a screen.

How should couples coordinate CPP, including the survivor benefit and an age gap?

For couples, CPP and OAS are not two separate decisions but one joint plan. The survivor benefit, your age difference, and each person's health all matter. Often it makes sense for the higher earner or the younger spouse to defer CPP, since a larger benefit also strengthens what the survivor receives after the first death.

When one spouse dies, the survivor keeps the larger OAS but receives only a portion of the deceased's CPP, and never more than the CPP maximum for one person. That single rule reshapes the timing decision. Deferring the larger CPP is partly about your own longevity and partly about leaving a sturdier income for whoever lives longer, usually the survivor who will face the bills alone.

An age gap adds another layer. If one spouse is several years younger, that person's deferral has a longer runway and protects the years when only one income remains. Couples can also share CPP for tax purposes in some cases, which can lower the household tax bill and, in turn, the OAS clawback exposure.

None of this is one-size-fits-all. Two healthy spouses close in age make a different call than a couple with a ten-year gap or a serious health concern. Allan has written about a couple facing cancer who had to weigh cashing in RRSPs against preserving OAS and the Guaranteed Income Supplement, a reminder that the right answer bends to the life, not the formula.

Does working past 65 or 70 change the math?

Yes. You can collect CPP and OAS while still working. Under 70, you can keep contributing to CPP and earn post-retirement benefits that add to your payment. But employment income can also trigger the OAS clawback, so working changes both what you receive and what you keep, in opposite directions.

Working while collecting is allowed, and many people do it. If you are under 70 and still earning, your CPP contributions buy you post-retirement benefits, small lifetime top-ups added each year you contribute while receiving CPP. That is a real, if modest, reward for working a few more years.

The other side is the clawback. A salary or self-employment income stacked on top of CPP and OAS can push your net income past the recovery-tax threshold, reducing the OAS you collect. This is exactly the situation where deferring OAS until you stop working can make sense, so you collect more of it in your lower-income years.

Allan has written about working past 70 while collecting CPP and OAS, and the takeaway is that working changes the timing question rather than settling it. The right move depends on how much you earn, how long you plan to keep at it, and how the extra income interacts with your taxes and benefits.

How We'd Model This With You

We don't hand you an answer. We show you the options.

These are the kinds of what-ifs we run live, in the meeting, until the right path for your situation becomes the obvious one.

Retire at 60: start CPP now or draw down the RRSP?

We put both versions on screen, an early, smaller CPP alongside drawing from your RRSP instead, and watch how each affects your portfolio's survival, your tax bill, and how much OAS you keep later.

A couple with a seven-year age gap deciding who defers

We model the higher earner and the younger spouse each deferring CPP, then show what the survivor is left with under each path, so the choice protects whoever lives longer.

Big RRIF balance threatening the OAS clawback

We test drawing the RRSP down early in the low-income years versus waiting, and show on screen how much OAS each drawdown order preserves after the recovery tax.

Common Questions

Is it always better to wait until 70 to take CPP?

No. Waiting raises CPP about 42% over starting at 65, which is a strong deal if you are healthy and have other income to live on first. But if you need the cash flow, expect a shorter life, or want to preserve investments, starting earlier can be the better choice for your situation.

Can I take CPP and OAS at different ages?

Yes, and many people do. CPP and OAS are separate programs with separate timing. It is common to start one earlier and defer the other, depending on which decision does more for your income, your taxes, and your exposure to the OAS clawback in any given year.

What is the OAS clawback and will it affect me?

The OAS clawback is a recovery tax that reduces your OAS once your net income passes a threshold that adjusts most years, disappearing entirely above an upper limit. It affects higher-income retirees, and large RRSP withdrawals or pensions in one year can trigger it, which is why drawdown timing matters.

Can I work while collecting CPP and OAS?

Yes. You can collect both while working. If you are under 70, your continued CPP contributions earn post-retirement benefits that top up your payment for life. Keep in mind that employment income can also push you into the OAS clawback, so working affects both what you receive and what you keep.

How does the survivor benefit affect when we should take CPP?

When one spouse dies, the survivor receives only part of the deceased's CPP, capped at the one-person maximum. Deferring the larger CPP often makes sense, since a bigger benefit also strengthens what the surviving spouse is left with, which matters most for the person who lives longer.