6 min
CPP, OAS, and the Retirement Timing Tango — The Most Important Dance of Your Life
You’ve been contributing to it your whole life—now let’s get it right. Every retiree dreams of mastering one crucial dance: the Retirement Timing Tango. And here’s the truth—next to good health, guaranteed, predictable income (GPI) sits at the top of every retiree’s wish list, mind list, and need list. Enough income opens the door to independence, autonomy, dignity, and the most sought-after prize of all: aging in place. Not enough income? That will rob you of sleep and enjoyment, creating a non-stop loop of 3 a.m. worry sessions that no melatonin can fix. A badge of a successful retirement starts with enough income to meet all your obligations. This matters far more than leaving an inheritance or making sure your ungrateful nephew gets the cottage. But here’s the thing about this particular tango: you need proper footwear. Orthopedic dance shoes, folks. Not slippers. Not boots. And definitely not Crocs (no shade here). Think support, stability, and a sole that won’t let you down over a long retirement. Here’s the sobering reality: 61% of Canadians fear running out of money in retirement. Women experience this anxiety even more—66% compared to 56% of men (CPP Investments, 2024). Meanwhile, 57% of working Canadians feel unprepared for retirement, and 13% don’t believe they’ll ever retire at all (HOOPP, 2024). Many overlook this, but two powerful government programs—the Canada Pension Plan (CPP) and Old Age Security (OAS)—can form the foundation of retirement income. The CPP fund holds over $675 billion in assets and is expected to remain sustainable for at least 75 years. Nearly three in four Canadians depend on it. The key is timing. Get it wrong, and you could leave serious money on the dance floor. Get it right, and your decisions could result in over $100,000 more in lifetime income. That’s not small change—that’s peace of mind. Think of CPP and OAS as your retirement dance partners—two leads working together to keep you steady and confident. But timing is crucial. When you decide to claim these benefits can mean the difference between a smooth glide across the dance floor and a financial stumble. How Much Money Do OAS and CPP Pay Out? Canadian Pension Plan (CPP): The maximum CPP retirement pension at 65 is $1,433 per month, though most Canadians receive between $830 and $899 based on their contribution history. Old Age Security (OAS): Payments for OAS are up to $740 monthly for ages 65–74 and $999 monthly for those 75 and older—these benefits can support your retirement if used strategically. You cannot start OAS before age 65. How to Calculate Your OAS Monthly Benefit The maximum monthly OAS payment for someone aged 65 to 74 is around $740–$742 per month in 2026, assuming you qualify for the full amount and do not have a clawback due to high income. If you defer OAS till Age 70, the monthly payments increase. Here's the formula. For each month you defer past age 65, your monthly OAS pension increases by 0.6%. That’s 7.2% per year. Over 5 years (age 65 → 70), this adds up to a maximum increase of 36%. Note: There’s no additional benefit to waiting past age 70; the 36% maximum applies at age 70. The Monthly OAS amount you receive depends on a Number of Factors: The age you start receiving benefits (see above) Your residency history in Canada (minimum of 10 years after age 18 to qualify; to reach the full payment amount generally requires 40 years). Income can reduce or eliminate your OAS benefit, even if you defer, due to an income-related “clawback”. Please note these amounts are subject to change. For updates, check the Government of Canada website here. Let’s be crystal clear: CPP and OAS are not handouts CPP is your deferred earnings—your money, matched by your employer. OAS is your citizens’ dividend, earned through residency in Canada. As Grant Roberts, CFP, a financial planner with the accounting firm Welch LLP, says, “OAS is a security blanket. Society is better when people aren’t impoverished at the end of life.” Lose the stigma. You earned this. This is where the choreography becomes tricky. You must make lifetime decisions without knowing how long you'll live (fun, right?). According to Statistics Canada, a 65-year-old Canadian can expect to live another 20 years on average, and if you’re already 65 in good health, your personal runway might be even longer. Taking CPP at 60 lowers benefits by 36%. Waiting until 70 increases benefits by 42%. Using average benefits, deferring can result in more than $100,000 extra in lifetime income. If you live long enough. Fred Vettese, a former chief actuary of Morneau Shepell (now Telus Health) and a national thought leader on retirement issues who has published the bestseller, Retirement Income for Life (ECW Press) has some important insights to share on how age impacts these OAS and CPP payouts. Vettese explains, “Approximately 75% of people win by deferring CPP to age 70 because they live past the break-even point.” His research indicates that about 75% of retirees benefit from delaying CPP until 70, while around 25% do not. Most people underestimate their longevity, but the odds are actually in favour of living long enough for the deferral to pay off. This is where inaction becomes dangerous. As Grant Roberts warns, “Inaction isn’t neutral—it’s a decision by default. While CPP does not start automatically at 65, OAS generally does for most people. The government won’t call to ask if you want to delay OAS for a higher payment—or remind you to apply for CPP at all. You have to ask, and you have to act.” And this isn’t theoretical. Roberts has seen seniors in their 70s who had never started CPP, simply because no one told them they had to apply. We’ve spent our entire adult lives being trained to save, so it’s unreasonable to think we can just flick a switch and suddenly become confident spenders the day we retire. As Grant Roberts puts it, “We teach saving for 50 years—no one teaches spending.” So here’s the real question: what’s your money brand? Saver? Spender? A hybrid in sensible shoes? Retirement requires a rebrand. Lifelong savers often need permission to spend—on experiences, joy, and yes, even dance lessons. Lifelong spenders may need to learn how to waltz with a budget (spoiler alert: let the budget lead). Either way, retirement isn’t about changing who you are—it’s about adjusting your rhythm so your money finally works for the life you’re living now. What About OAS Clawbacks? If your income exceeds about $90,000, the OAS clawback is 15 cents for every dollar. OAS clawbacks often discourage people unnecessarily. As I always say, "don’t let a dime stand in the way of a dollar." Strategic RRSP withdrawals between ages 65 and 70 can greatly reduce future clawbacks and enhance long-term results. This is choreography, not chaos. CPP and OAS planning should begin in your 50s, not at 64½. Ask yourself whether you intend to work past 65, whether you’re healthy enough to delay, and what income sources will fill the gap. Waiting for someone else to lead this dance is a sure way to step on your own toes. Proactively Managing Your OAS and CPP Benefits While most Canadians are automatically enrolled for Old Age Security (OAS) and will receive an enrollment letter around their 64th birthday, you may need to take action if you want to delay your start date to receive higher monthly payments. If you wish to delay, change your start date, or correct any information in your enrollment letter, you'll need to contact Service Canada directly. You can manage these choices in one of three ways: Go Online: Visit "My Service Canada Account" By Telephone: Call 1-800-277-9914 In-Person: Visiting a Service Canada Centre near you Don't assume automatic enrolment means the timing is right for you—review your options carefully, as the decision to delay could significantly increase your retirement income. The Last Dance (Remember the Poorly Lit High-School Gym?) Because the Retirement Timing Tango isn’t a sprint—it’s a 30-year dance marathon, and you are both the dancer and the charity you’re raising money for. CPP and OAS, timed well, aren’t about financial flash; they’re about stamina, balance, and staying upright long after the music changes. Get the timing right and your later years won’t feel like a frantic scramble under flickering gym lights—they’ll feel like a slow, confident final song where you know the steps, trust your footing, and aren’t worried about collapsing halfway through. That’s the point. Not just surviving retirement, but staying on the floor until the very last dance—with dignity, confidence, and enough income to enjoy the moment instead of counting the minutes until it’s over. Sue Don’t Retire… ReWire! Know someone who’s about to leave serious money on the dance floor? Forward this blog before the music stops. Consider it a public service announcement disguised as friendship. And if you want regular doses of retirement clarity, confidence, and choreography (no leotards required), subscribe here.
