Should I Delay CPP & OAS Until Age 70? – Complete Answer with Real-Life Examples (Updated)

Most seniors start their CPP and OAS when they retire or at age 65, without evaluating the options. The truth is that many seniors would benefit from delaying CPP until age 70.

Here is how you can figure out what is best for you.

The government pensions, CPP and OAS, are full of cool opportunities to increase after-tax income, because:

–        Seniors often have flexibility in taking taxable or non-taxable income.

–        OAS is subject to several “clawbacks” in addition to income tax.

To see these opportunities, you need to think creatively about pensions, tax and investments.

After age 65, the single most important factors in deciding whether to delay CPP are:

– Will you withdraw more from your investments if you delay starting?

– Are you a growth investor? This decision is very different for growth investors.

You will learn:

• Why should you ignore “CPP breakeven” calculations?
• Why are life expectancy stats understated?
• What is the best way to estimate your life expectancy?
• What happens if you are still working?
• How does your tax bracket each year affect your CPP & OAS & GIS?
• How can you qualify for the maximum GIS?
• How does your CPP & OAS fit into your overall retirement income?
• Who should take CPP & OAS early and contribute it to RRSP?
• How do CPP & OAS affect the estate you leave for your kids?
• Who should delay their CPP to age 65? Real life examples.

Note that delaying CPP from age 60 to age 65 is a different question with different answers. I discuss this in a recent post: Should I start my CPP early? – Real-Life Examples (Updated)

A quick review of the facts:

Delayed CPP Rules

–        The maximum CPP benefit in 2025 at age 65 is $1,433 per month, or $17,196 per year.

–        You can delay starting up to age 70 and you get 8.4% more for every year after age 65. If you start at age 70, you get 42% more for life, so the maximum is $2,035 per month, or $24,418 per year.

–        You can start CPP even if you are still working.

–        If you are over 65 and still working, you can choose whether or not to pay into CPP.

–        Your 8 lowest earning years since age 18 (plus years when you had kids under age 7) are “dropped out” in calculating how much CPP you get.

Delayed OAS Rules

–        The maximum OAS benefit in 2025 at age 65 is $735 per month, or $8,819 per year. If you are over age 75, you get 10% more.

–        You can delay starting up to age 70 and you get 7.2% more for every year after age 65. If you start at age 70, you get 36% more for life, so the maximum is $1,000 per month, or $11,994 per year.

Clawbacks – Guaranteed Income Supplement (GIS) and OAS Clawback

–        You can get up to $1,098 per month, or $13,173 per year, additional income from GIS if you are single, collecting OAS and have a taxable income less than $22,272 per year (excluding OAS income).

–        For married couples, GIS is up to $1,321.56 per month, or $15,859 per year combined if your combined taxable income is under $29,424 (excluding OAS income).

–        GIS is “clawed back” at 50% of your income (excluding OAS income). Low income seniors are in a 50% tax bracket! This is why strategies for high income people can also work for low income seniors.

–        The OAS clawback is a tax of 15% of your taxable income between $93,454-$151,668 per year. Tax brackets look different when you include the clawback taxes.

The simple breakeven calculations miss many important factors. For example, John starts receiving $17,196 per year of CPP and $8,819 per year of OAS at age 65. Jane starts receiving $24,418 CPP and $11,994 OAS at age 70. It will take Jane 11-13 years to catch up. The simple breakeven is age 81 for CPP and 84 for OAS. John gets more before age 81 and 84, while Jane gets more after.

This implies if you expect to live past 84 (and most people will), you should delay your CPP and OAS. But this is not the complete answer.

The complete answer depends on these 5 main factors. Note that some of these are similar for the decision to start CPP early at age 60 in my recent video, but some of these are very different or even opposite:

1.  How long do you expect to live?

Morbid question, but important for this decision. [I covered this in my recent post on taking CPP early. If you viewed that one, you could skip ahead 2 minutes here.] If you start CPP and OAS at age 70 instead of 65, you collect for 5 less years, but you get more and eventually catch up. The longer you expect to live, the better it is to delay CPP. Today, average life expectancy for people that made it to age 65 is age 86. (Actually, it’s 85 for men and 88 for women.)

But this is understated. Average life expectancy has been rising about .2 years each year. You may think you get a year closer to death every year, but in reality it’s only .8 of a year closer. This is mainly because of advances in medical science being able to cure or prolong life for most diseases, especially heart disease and cancer. About 88% of all deaths in Canada are from diseases. By the time today’s 65-year-olds get there (in 25 years), they are expected to live to age 90 (actually, it’s 89 for men and 91 for women).

If you are married, it is best to use your combined life expectancy. The one of you that lives the longest should get 60% of the CPP of the other. For married 65-year-olds today, the one that lives the longest is projected to live to age 94.

Most people underestimate their life expectancy. They may focus on how old their parents or other older family members were when they passed away, but every generation lives longer than the last.

Your specific life expectancy might be lower if you have significant health issues. You can get an estimate with either Project Big Life’s Life Expectancy Calculator that targets Canadians or Living to 100 Calculator with more in-depth lifestyle questions.

Without major health issues, it is probably best to use average life expectancy, especially if you are married so you can plan for the one of you that lives the longest. Bad genes mostly affect life expectancy for people under age 50, while life expectancy above age 50 is mostly based on lifestyle. Your combined life expectancy based on whoever of you or your spouse lives the longest is probably the best age to use.

Summary: Life expectancy suggests most people should wait to age 70.

2.  Can you qualify for GIS?

The Guaranteed Income Supplement (GIS) is significant, being up to $15,859 per year tax-free for a couple. You can only get GIS if you are getting OAS. You may be able to qualify with some creative planning, such as deferring taxable income and living only on OAS, GIS and non-registered investments. There are all kinds of creative strategies. It’s a topic that fascinates creative planners. To get the most total pension, you need to plan at least a few years early and often do the opposite of what you would otherwise do. I have post specifically about this called, “Make Your Retirement Comfortable with the 8-Year GIS Strategy”. See the story of Gloria below for an example. The 50% clawback is a huge factor.

Summary: If you qualify for GIS with or without creative planning, you should almost definitely start your OAS at age 65. GIS is part of OAS, so you cannot get GIS unless you are getting OAS. 

3.  How do you invest?

This is where it looks different for growth investors. The investing factor for delaying CPP to age 70 is also different from the CPP early at 60 decision because the implied returns are different. Starting your CPP early might mean you can take less income from your RRSPs or other investments, leaving them to grow. Then you can take more income from your investments later. If you start CPP 5 years sooner at age 65, you can leave that amount of your investments to grow. To have the same lifetime income as someone starting at age 70 with a life expectancy of age 90 with 2% inflation, your investments would have to earn an average return of 6.8% per year. In other words, the formula for deferring CPP from age 65 to 70 has an implied return of 6.8% per year. (It was 10.4% for delaying from 60 to 65.)

Investing says that if you expect your investments to average more than 6.8% per year, you should take your CPP earlier. For growth investors, that is lower than the long-term return of the stock market. Investors should generally diversify globally or in the US. The average return of the S&P500 from 1950 to today is 10.8% per year. For financial planning purposes, a more conservative return about 8% per year is more prudent, but for estimating which start date for CPP is likely to provide the most lifetime income for you, using actual average past returns is more likely closer to future returns.

In short, growth investors should start CPP earlier at age 65 (or possibly age 60) to let their higher-return investments grow longer.

For people with more conservative investments, it is unlikely that their investments would average 6.8% per year. You may expect only 5% for a balanced portfolio or 3% for a fixed income or GIC portfolio.

In short, moderate or conservative investors should delay CPP to age 70 and live on some of their lower-return investments until then.

Summary: Investing suggests that most people should wait until age 70, but growth investors should start CPP at age 65 or sooner.

4.  Are you still working?

How can you plan to pay the least tax on your CPP? If your tax bracket is different at age 65 than it would be at age 70, that is a major factor in determining when to start CPP. Let’s look at some examples.

If you are still working, CPP income will be added to your work income and will probably be taxed at a higher rate. Most retirees pay 20% tax on their CPP, based on taxable income below $53,000 per person in 2025. If you are still working and end up paying 40% tax on your CPP, but expect to only pay 20% in a few years, it is probably better to wait for a year when you make little or nothing from work.

Some people have no other income, at least not taxable income. You might think they could then take their CPP with no tax – but that is not a good idea. With no other taxable income, you can start OAS and collect full GIS. If you start your CPP, your GIS is reduced by 50% of your CPP pension.

If you delay CPP, it is larger and more likely to be affected by the OAS clawback for people with moderately high income. This requires planning, but if you think you will be more affected by the OAS clawback in the future with the higher CPP, then it may be better to start CPP earlier. Many articles say that the OAS clawback is a factor. However, I found that in every example I looked at, the OAS clawback did not change my advice.

Work suggests people working earning over $40,000 should delay CPP until the first full year after you stop working. This is because some or all of their CPP will likely be taxed at a higher rate than after they stop working. People with no other taxable income should delay their CPP to age 70 and start OAS & GIS at age 65.

Summary: Knowing your expected income and tax bracket for each year from age 65 to 70, including clawbacks of other programs, can be very helpful in paying the least tax on your CPP. 

5.  When do you need the money?

It is nice to get more CPP or pay less tax on it, but you need a Plan to have the money you need for your lifestyle. Some people don’t have enough other income and have no choice on when to start CPP. However, CPP is just one piece of your retirement income. When you look at how to provide your overall retirement income most effectively, you might decide differently about your CPP.

Your retirement plan should include figuring out how much income you want and when. Your Financial Plan should figure out the desired retirement lifestyle you want that is sustainable for you. Most people want to be confident they can maintain their lifestyle as long as their money and health allow and not worry about having to cut back sometime during their retirement.

Your retirement plan should also include how to structure your retirement income in the most effective way with the lowest lifetime tax, which involves deciding how much to take from which account. CPP is just one piece. You may also have OAS, RRSP, TFSA, pensions, investments in your corporation or trust, non-registered investments, leveraged investments such as the Smith Manoeuvre, or other accounts. Deciding how much to withdraw from where affects how much retirement income you receive and how much tax you pay. Structuring your overall retirement income can make your decision about when to start CPP clear. See my video for details: How to Design Your Retirement Income: An Overview .

A common belief is that retirees spend less as they age, but that is generally not our experience with actual Canadians. People in their 80s with money and health generally travel as much as they did in their 60s. They likely do more luxury travel and less active travel. The entertainment you enjoy probably costs as much in your 80s as it did in your 60s.

If you have major expenses for a few years, it might make sense to start CPP earlier. For example, if you are still supporting kids that are at home or in school, or with a wedding or home down payment. You might have major home expenses from moving to or personalizing your retirement home. You might be planning on one or 2 huge trips.

Many people have high value uses for money, such as lots of RRSP room. Taking CPP early and requesting no tax withholding so you can contribute the full amount to your RRSP can be an effective strategy for growth investors, but not more conservative investors. Note this works for RRSP or other tax-deductible investments, but not for TFSA.

CPP does not leave an estate for your children or for charity, but investments do. If leaving a legacy with your estate is a major factor for you, it may be helpful to take CPP earlier to invest it and let it grow. Any investments left can be passed on to your desired beneficiaries.

People have different values. Some value freedom and being able to live the way they want, while others value security from a higher regular income. If you value freedom, you might consider starting CPP earlier. The extra money gives you more freedom to do what you want. If you value security, you should probably delay CPP to get the higher, guaranteed income.

Summary: Contributing CPP to your RRSP can make it worthwhile taking CPP early for growth equity investors, but not more conservative investors. Specific spending plans in your retirement plan mean there might be exceptions where starting CPP earlier makes sense. Being able to leave a larger estate can be a reason to take CPP early and invest it. People who value freedom might also want to start CPP earlier. 

Best Advice

My advice is based on all the pension, tax and investment factors. Which choice is most likely to give you the highest after-tax income throughout your life?

My best advice is:

1.  OAS – If you are retired, take it at age 65. If you can qualify to receive GIS (even with creative planning), definitely start at age 65.

2.  CPP – If you are retired and will withdraw the same amount from your investments either way, delay starting until age 70. If delaying means you will need more income from your investments, then it depends on how you invest.

3.  Balanced investor or conservative GIC investor – Probably delay CPP to age 70 and live off your lower return investments until then.

4.  Equity growth investor – Always start CPP and OAS at 65, unless you could qualify for GIS, to let your higher return investments grow more. If you are still working, invest your extra income if you can.

Let’s look at some real-life stories from my clients. Should they delay CPP and OAS to age 70?

1.  Angela is 65 and retired. She has no investments and only a fixed pension (not integrated with CPP). Her breakeven age is 79 for CPP and 80 for OAS. She is of average health. Should she delay CPP and OAS until age 70? Yes for CPP (to get maximum GIS). No for OAS.

2.  Brian is 65 and retired. He has significant retirement investments, is a growth investor, and plans for a steady retirement income. If he delays CPP or OAS, he would withdraw from investments instead. His breakeven age is never for both CPP and OAS. Should he delay CPP and OAS until age 70? No. (Investment reasons.)

3.  Chris is 65 and still working part time earning $20,000 per year. She has a small RRSP and TFSA. She is conservative and only invests in GICs at 3% per year. Her breakeven age is 82 for CPP and 83 for OAS. Should she delay CPP and OAS until age 70? Yes. (Investment reasons.)

4.  Dave is 65 and still working earning $50,000 per year. He is a moderate, balanced fund investor. A reasonable expected return is 5% per year. His breakeven age is 83 for CPP and 84 for OAS. Should he delay CPP and OAS until age 70? Yes. (Tax reasons are more important than investment reasons.)

5.  Erin is 65 and still working earning $50,000 per year. She is a confident equity fund investor. A reasonable expected return is 8% per year long term. Her breakeven age is 91 for CPP and 92 for OAS. Should she delay CPP and OAS until age 70? No. (Investment reasons are more important than tax reasons.)

6.  Fred is the same as Erin, 65 and still working earning $50,000 per year. He is a growth equity investor. A reasonable expected return is 8% per year. His CPP and OAS will be taxed on top of his salary in a 30% tax bracket. Fred has lots of RRSP room. He plans to collect CPP and OAS and invest the full amounts into his RRSP. His breakeven age is never for both CPP and OAS. Should he delay CPP and OAS until age 70? No. (Investment reasons.)

7.  Gloria is 65 and retired. She has significant investments in RRSP, TFSA and non-registered because she is a growth investor. She can qualify for $13,173 GIS income if she avoids any taxable income other than OAS. She plans to delay CPP and withdraw only from her TFSA and non-registered investments to avoid any other taxable income. Her breakeven age is age 81 for CPP and never for OAS. Should she delay CPP and OAS until age 70? Yes for CPP. No for OAS. (To get maximum GIS.)

You can see in the image summary of these stories, that the answer with CPP & OAS is complex and these government pensions are only one piece of your retirement income.

There are often creative opportunities for seniors to get a higher after-tax income for the rest of their life. Fred and Gloria are 2 examples.

The best advice is to look at this as part of a professional Retirement Income Plan.

Ed