Insights & Resources

Deciding when to start your Old Age Security (OAS) might feel like a simple checkbox on your to-do list. In reality, that timing can spell thousands of dollars gained—or lost—over your retirement years. In 2025, OAS rates, clawback thresholds and tax rules all intersect in ways that call for a clear plan. Do you grab the cheque at 65 or wait for a bigger monthly boost? This article walks you through the numbers, key trade-offs and real client scenarios so you choose the right path for your needs.

We’ll cover:

• What OAS looks like in 2025 and why net income matters
• The upside of delaying OAS up to age 70
• Why some opt for OAS at 65 instead
• How to integrate OAS timing into your overall retirement income strategy
• Common tax traps and pitfalls to avoid

1. Understanding OAS in 2025: What’s at Stake?

Old Age Security isn’t a standalone payout. It’s a piece of your broader retirement puzzle—and in 2025 that puzzle has some shifting pieces. The basic monthly OAS payment for Canadians aged 65 to 74 is estimated at about $727. Once you hit 75, that climbs to roughly $800. Sounds straightforward, right? But here’s the twist: if your net income exceeds $93,454, the recovery tax—or clawback—begins to shrink that cheque.

How the Clawback Works

Let’s say Robert turns 65 in 2025. He’s got income from a rental property plus RRIF withdrawals totalling $100,000. Instead of the full $727 monthly OAS, the government will reduce his benefit by 15 cents for every dollar above the threshold. In Robert’s case, that means giving back thousands over the year.

Keep in mind:

• If your income is just under the threshold, you keep the full amount.
• If it’s well over, you could lose the entire OAS benefit.

Here’s the thing: slipping past that $93,454 line can feel like a hidden tax. Many Canadians don’t realize OAS ties directly into net income until they see it on their tax return. So before you check “Yes” at age 65, map out your projected income sources—dividends, pensions, consulting fees—and see if you’ll be walking into a clawback zone.

2. The Upside of Delaying OAS Until Age 70

Postponing OAS sounds counterintuitive—you’re turning down free money, after all. But every month you wait past 65 boosts your future cheque by 0.6%, up to a maximum increase of 36% at age 70. In plain terms, a $727 benefit at 65 jumps to about $989 at 70. That’s nearly $3,100 more per year for life.

Real-Life Example: Florence’s Strategy

Florence is 64 and still doing part-time consulting. Her current income is enough to cover daily expenses, so she doesn’t need OAS right away. By deferring until 70, she locks in that 36% lift. Meanwhile, she continues to draw modestly from her TFSA and personal savings without triggering clawbacks.

She gets three benefits:

1. A higher permanent monthly cheque.
2. Lower chance of hitting the clawback threshold in her late 60s.
3. More flexibility to stagger other income—like RRIF withdrawals—when her consulting wind-down kicks in.

If you expect to live into your late 80s or 90s, that extra 36% compounds into a substantial sum. Even if you only live to 85, you come out ahead compared to starting at 65.

3. Why Some People Opt for OAS at 65

Waiting for a bigger cheque isn’t always the right call. For many, taking OAS at 65 is the more practical move. If you rely on that payment to cover daily costs—rent, groceries, heat—delaying might force you into higher-interest debt or deplete your savings too quickly.

Case Study: Immediate Income Needs

Consider Jane, who has a small condo, no pension and limited TFSA savings. Skipping five years of OAS measures could mean tapping her credit line just to get by. By accepting that $727 monthly payment at 65, she secures cash flow, keeps credit-card interest at bay and shields her TFSA to preserve growth potential for later.

Other reasons to start early include:

• Stabilizing estate planning: using OAS to cover expenses so you don’t sell assets with large capital gains.
• Managing future tax jumps: getting OAS now before mandatory RRIF withdrawals push you into a higher bracket at 72.

In short, an immediate OAS payment can deliver peace of mind—especially when living expenses or healthcare costs are front of mind.

4. Crafting Your Personal OAS Timing Strategy

Between 65 and 70, there’s no one-size-fits-all. The key is weaving your OAS decision into your entire retirement income plan. Ask yourself:

• What will my income mix look like from 65 to 72? (RRIF, part-time work, dividends, rental income.)
• Will I cross the clawback threshold any year if I collect at 65?
• Do I need cash flow now, or can I rely on other sources for a while?
• What do my life expectancy and health picture suggest?

Side-by-Side: Lyla and Pete

Lyla and Pete both hit 65 in 2025, but their situations differ:

1. Lyla still consults part-time and expects $95,000 in total income next year. If she takes OAS, she enters clawback territory. Delaying to 70 nets her a higher cheque and sidesteps clawback years.
2. Pete lives on a small pension plus interest, totaling $45,000 yearly. He needs OAS cash flow now. Delaying would force him to dip too heavily into savings.

We ran projections and recommended Lyla defer until 70 and Pete start at 65. Both ended up with more predictable budgets, lower exposure to clawbacks and a clearer path through their 70s.

5. Common Pitfalls and Tax Traps to Watch For

Without a plan, OAS can feel like a hidden tax minefield. Here are a few traps to sidestep:

Clawback Ambush

If net income exceeds $93,454, you repay 15¢ for every dollar over. Missing this detail can feel like a stealth tax on your golden years. Always project your income with and without OAS in the mix.

Bracket Creep and RRIF Overlaps

Imagine you start OAS at 65 and in the same year kick off mandatory RRIF withdrawals. That double-hit might push you into a higher bracket, raising your tax bill across all income.

Ignoring Life Expectancy

Deferring only pays off if you live long enough to collect enough extra payments to offset the five years you skipped. If your health outlook suggests a shorter horizon, consider starting earlier.

Winging the Choice

Picking an OAS start date on a whim—“My friend said 65 is best”—is rarely wise. This choice hinges on personal factors: your health, lifestyle, legacy goals and projected incomes. A quick calculation today can save you tens of thousands over time.

Final Thoughts

Deciding when to collect OAS in 2025 isn’t a matter of watching the calendar—it’s about fitting one more piece into your broader retirement plan. Whether you’re eyeing that 36% boost at age 70 or need the cash flow at 65 to keep your budget balanced, there’s a right answer for your life.

Here’s what you can do next:

1. Project your incomes and expenses from 65 through at least age 75.
2. Estimate your net income if you start OAS at 65, 66, 67… up to 70.
3. Compare the total lifetime benefits under each scenario, factoring in clawbacks and taxes.
4. Decide on the timing that best aligns with your cash-flow needs, tax position and life expectancy assumptions.

If you’d like a second pair of eyes on the numbers—or if you’re not sure how to build those projections—reach out. We help professionals and business owners weigh these exact trade-offs, making sure that choosing when to start OAS is a confident, numbers-driven decision.

We work with business professionals, executives, and families to grow and protect their wealth using our Wealth Plan formula. To discuss our approach and if it is the right fit for you, we invite you to schedule a no-obligation discovery consultation.