Delaying CPP and OAS to 70: How Much More Will You Get?

One long-standing strategy in retirement planning is to increase government pension income by delaying benefits. In Canada, deferring entitlement can raise payments from both the Canada Pension Plan (CPP) and Old Age Security (OAS) — as well as affect the Guaranteed Income Supplement (GIS). This is similar to the U.S. Social Security approach, where postponing benefits raises lifetime monthly income.

OAS receives a permanent 10% boost for those 75 and older

Beyond the incremental increases that come from regular inflation adjustments, Ottawa introduced a policy change in the 2021 federal budget that permanently raised OAS for seniors aged 75 and over. Implemented in July 2022, this measure added a 10% uplift to eligible OAS payments, along with the usual quarterly inflation adjustments. The National Institute for Ageing (NIA) noted this was the first permanent OAS increase in nearly 50 years and has encouraged retirees to consider deferring OAS to capture larger payouts over time.

Is it worth waiting for CPP and OAS until age 70?

Experts at the NIA, including Bonnie-Jeanne MacDonald and Doug Chandler, recommend that retirees who can afford to do so consider delaying OAS to maximize the higher payments later in life. The mechanics are familiar for CPP: delaying CPP from age 65 to 70 raises lifetime payments by about 42% (roughly 0.7% per month of deferral after 65). Fewer people know that OAS also increases with deferral. Since OAS only begins at 65 or later, postponing OAS to age 70 can boost the benefit by about 36% — roughly 0.6% per month of deferral after 65.

The added 10% boost for recipients aged 75 and over makes delaying OAS even more attractive. Prior to the 75+ adjustment, the NIA estimated the average Canadian who took OAS at 65 instead of 70 might forgo roughly $10,000 in lifetime benefits; after the 10% increase, that potential loss rises to around $13,000.

Delaying CPP vs delaying OAS

Retired actuary Malcolm Hamilton cautions that higher relative increases for one program don’t automatically mean it is preferable to defer that program over the other. He notes key differences in indexing: OAS increases in line with the consumer price index (CPI) and is adjusted quarterly, while CPP’s base pension (for those who start at 65) grows according to changes in the Year’s Maximum Pensionable Earnings (YMPE), which tracks wages and historically rises faster than CPI by at least around 1.2% per year. After benefits begin, both OAS and CPP are indexed to inflation, although CPP typically adjusts annually.

For retirees without a defined-benefit (DB) pension, these “wait and increase” strategies can be especially valuable. Many private-sector retirees lack inflation-protected DB plans, so the automatic inflation-indexing of CPP and OAS — combined with higher starting amounts when deferred — provides durable, inflation-adjusted lifetime income. Delaying effectively compounds the deferment bonuses with future inflation adjustments and the 75+ OAS uplift.

Different perspectives on clawbacks

The NIA also highlights additional reasons for deferring OAS: lower GIS clawbacks after age 70 and potentially higher net OAS despite clawbacks for those with significant retirement income. Lower-income seniors who depend on GIS might bridge to age 70 by drawing down RRSPs or other registered savings so they can receive larger OAS payments later while reducing future GIS clawbacks.

However, there are caveats. Someone with fewer than 10 years of Canada residency after age 18 is not eligible for OAS at all, and OAS is prorated for those with less than 40 years of Canadian residence. Malcolm Hamilton points out that deferring OAS to draw more from a RRIF can reduce RRIF income after 70 and raise OAS later, but by not taking OAS until 70, low-income retirees may temporarily lose full GIS benefits before 70.

Doug Chandler suggests that modest RRSP balances can affect GIS if withdrawn after OAS begins, so using registered savings to bridge to 70 could lower GIS clawbacks later. Financial researchers such as Moshe Milevsky and commentators like Larry Kotlikoff favor delaying to maximize lifetime retirement income, though Milevsky questions why advisors do not more aggressively promote deferral strategies, noting a potential industry bias toward keeping assets under management.

Uncertainty: changing rules, tax rates and health considerations

Policy risk and personal health are important considerations. Governments can change tax rates and benefit rules, and larger delayed CPP and OAS payments could face different taxation in the future. Those in poor health should weigh life expectancy carefully before deferring; the actuarial neutrality of the system is designed to balance lifetime value, but individual circumstances matter.

MacDonald observes that CPP operates with economies of scale and long-term assumptions that individual retirees cannot match, while Hamilton emphasizes the distributional effect: affluent, healthy people who can defer benefit most, whereas lower-income or less healthy people who cannot defer miss out.

For many Canadians, CPP and OAS function like life annuities, offering guaranteed, inflation-indexed lifetime income and protection from market and interest-rate risk. Rising interest rates have also made commercial annuities more attractive to some retirees seeking additional guaranteed income.

Final thoughts

Hamilton’s practical guidance is straightforward: if you cannot afford to defer OAS or GIS, don’t defer. If you can afford it but have limited life expectancy or serious health concerns, taking benefits earlier may be the better choice. If you are healthy and financially comfortable, delaying CPP and/or OAS as long as possible generally increases lifetime guaranteed income, especially when interest rates are low. The best decision depends on individual family circumstances, income sources, health, and retirement goals.

Jonathan Chevreau is the Investing Editor at Large for MoneySense. He founded the Financial Independence Hub, wrote Findependence Day, and co-authored Victory Lap Retirement. He can be reached at [email protected].