Old Age Security (OAS) is a core component of many Canadians’ retirement income strategy, yet many people are unsure of how it works.
Here is a quick overview that we believe will be helpful.
Old Age Security (OAS) is a core component of many Canadians’ retirement income strategy, yet many people are unsure of how it works. Here is a quick overview that we believe will be helpful. Originally introduced in 1927 as an anti-poverty measure for seniors, OAS has evolved into a mainstream retirement benefit. As of 2025, the maximum monthly OAS benefit is $740.09 for those aged 65-74 and $814.10 for those 75 and older, who begin receiving payments at age 65.
Here's a quick summary of key facts:
OAS is funded through general tax revenues, not personal contributions.
Benefits are adjusted quarterly to reflect increases in the Consumer Price Index (CPI), helping maintain purchasing power.
You do not need employment income history to qualify.
OAS is not automatic—you must apply. The earliest you can begin is at age 65.
To receive the full benefit, you must have lived in Canada for at least 40 years after age 18.
OAS may be subject to a recovery tax (commonly called the “clawback”). This applies to higher-income earners who are required to pay back some or all of the benefit.
In 2025, the clawback starts at $93,454 of individual net income and is fully eliminated for incomes above $151,668.
It is important to note that large RRSPs or pensions can increase taxable income and reduce OAS benefits. In many cases, and later in your working years, it may make more sense to reduce RRSP contributions and focus on building up your tax-free assets.
Deciding when to start OAS is a key decision that should align with your broader retirement strategy. You can delay receiving OAS until age 70. Each year of deferral after age 65 increases your benefit by 7.2%.
- For example, deferring from age 65 to 70 could increase your monthly benefit to $1,006 (based on 2025 rates).
Like many decisions about retirement strategy there is no one size fits all. Listening to what works for a friend or colleague may have disastrous consequences for you. Make sure to speak to a financial planner about your options and map out the best path forward for your personal circumstance.