Can You Work While Receiving CPP and OAS? A Complete Guide for Canadian Retirees

One of the most common questions Canadians ask when planning retirement is: Can I continue working while receiving CPP and OAS?

The simple answer is yes. In fact, many Canadians continue working part-time or even full-time after starting their Canada Pension Plan (CPP) and Old Age Security (OAS) benefits.

However, employment income can affect your taxes, CPP contributions, and potentially trigger the OAS recovery tax (commonly known as the OAS clawback). Understanding these rules can help you maximize your retirement income and avoid unpleasant surprises at tax time.

In this guide, we'll explain exactly how CPP and OAS work when you're employed, how much you can earn before triggering an OAS clawback, and strategies to optimize your retirement income.

Can You Work While Receiving CPP?

Yes. There is no limit on how much employment income you can earn while receiving CPP retirement benefits.

You can begin receiving CPP as early as age 60 and continue working as much or as little as you like.

Your CPP payments will continue regardless of your employment income.

CPP Contributions While Working

If you are under age 70 and continue working while receiving CPP, you may still be required to make CPP contributions on your employment earnings.

• If you are under age 65, CPP contributions are mandatory.
• If you are between ages 65 and 70, you can choose to stop CPP contributions by filing Form CPT30.
• At age 70, CPP contributions stop automatically.

Post-Retirement Benefits (PRB)

The good news is that CPP contributions made while receiving CPP are not wasted.

These contributions generate additional Post-Retirement Benefits (PRBs), which increase your CPP income for life.

Each year you contribute while receiving CPP can add a small but permanent increase to your future CPP payments.

Can You Work While Receiving OAS?

Yes.

Old Age Security does not restrict your ability to work. You can continue working full-time, part-time, seasonally, or operate your own business while collecting OAS.

However, unlike CPP, OAS has an income threshold that can trigger a repayment requirement.

This repayment is commonly referred to as the OAS clawback.

What Is the OAS Clawback?

The OAS clawback is officially known as the OAS Recovery Tax.

If your net income exceeds a certain threshold, the government requires you to repay part or all of your OAS benefits.

The repayment amount is calculated as 15% of income above the annual threshold.

Example

Suppose:

• Your net income is $100,000.
• The OAS clawback threshold is approximately $93,000.
• You exceed the threshold by $7,000.

The clawback would be:

$7,000 × 15% = $1,050

Your OAS payments would be reduced by approximately $1,050 for the following year.

What Income Counts Toward the OAS Clawback?

Many retirees are surprised to learn that employment income is only one source of income included in the clawback calculation.

The government looks at your net income reported on your tax return.

This includes:

• Employment income
• CPP benefits
• RRIF withdrawals
• Pension income
• Rental income
• Interest income
• Dividend income
• Capital gains
• Business income

As a result, retirees can sometimes trigger a clawback even without working.

Can You Lose All of Your OAS?

Yes.

At sufficiently high income levels, your entire OAS benefit can be recovered through the clawback process.

The exact income level changes each year based on government adjustments.

Higher-income retirees should carefully plan withdrawals and investment income to avoid unnecessary clawbacks.

Working While Receiving CPP and OAS: Example Scenarios

Scenario 1: Part-Time Employment

Sarah is 67 years old and receives:

• CPP: $12,000/year
• OAS: $8,800/year
• Part-time employment: $20,000/year

Her total income remains below the OAS clawback threshold.

She receives her full CPP and full OAS.

Scenario 2: Consulting Income

John is 68 years old and earns:

• CPP: $15,000/year
• OAS: $8,800/year
• Consulting income: $80,000/year

His total income exceeds the clawback threshold.

He continues receiving OAS, but a portion must be repaid through the recovery tax.

Tax Considerations

Many retirees focus on the OAS clawback and overlook ordinary income taxes.

Employment income is taxable and can push you into a higher marginal tax bracket.

This can affect:

• Income tax payable
• OAS clawback
• GIS eligibility
• Age amount credits
• Other government benefits

It's important to evaluate the combined impact rather than looking only at CPP or OAS.

Strategies to Reduce OAS Clawbacks

Delay RRIF Withdrawals Until Required

Taking large withdrawals earlier than necessary can increase taxable income and trigger unnecessary clawbacks.

Split Pension Income

Eligible pension income splitting can reduce the higher-income spouse's net income.

Manage Capital Gains

Spreading gains across multiple years may help reduce clawback exposure.

Use a TFSA

Withdrawals from a Tax-Free Savings Account (TFSA) do not count toward OAS clawback calculations.

For many retirees, maximizing TFSA contributions can be one of the most effective tax-planning strategies available.

Should You Delay CPP or OAS If You Continue Working?

In some situations, delaying benefits can significantly increase lifetime retirement income.

CPP increases by approximately 0.7% per month after age 65 until age 70.

OAS increases by approximately 0.6% per month after age 65 until age 70.

For retirees with strong employment income, delaying benefits may produce larger guaranteed government pensions later in retirement.

How Retirementize Can Help

The interaction between employment income, CPP, OAS, taxes, RRIF withdrawals, and investment income can become surprisingly complex.

Even small changes in retirement income can affect taxes and OAS clawbacks.

The Retirementize Retirement Income Calculator allows you to model these interactions and compare different retirement strategies.

You can evaluate:

• Working part-time during retirement
• Different CPP start dates
• Different OAS start dates
• RRIF withdrawal strategies
• OAS clawback impacts
• Tax-efficient retirement income plans

Frequently Asked Questions

Can I work full-time while receiving CPP?

Yes. CPP does not limit employment income.

Can I work while receiving OAS?

Yes. However, higher income may trigger an OAS clawback.

Will I lose CPP if I return to work?

No. CPP continues regardless of employment income.

Can I stop CPP contributions after age 65?

Yes. Individuals aged 65 to 70 can elect to stop contributing by filing Form CPT30.

Do TFSA withdrawals affect OAS?

No. TFSA withdrawals are not included in net income calculations for OAS clawback purposes.

Conclusion

The good news is that Canadians can absolutely continue working while receiving CPP and OAS.

CPP has no earnings limit, while OAS may be partially reduced if your income exceeds the clawback threshold. Understanding how employment income interacts with taxes, government benefits, and retirement withdrawals can help you make better financial decisions.

Before deciding how much to work during retirement, use the Retirementize Retirement Income Calculator to see how additional income affects your taxes, CPP, OAS, and long-term retirement success.

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