Is Retirement Age 65 or 67 in Canada?
The retirement age for Canadians is 65! Or is it...? Why is it 65, why is it not 67, where did 67 come from, anyway?
Why Do Canadians Think It's 67?
Let’s rewind a bit. Back in 2012, the Canadian government made headlines by suggesting that the age for receiving Old Age Security (OAS) would gradually increase from 65 to 67 starting in 2023. Naturally, this set off a panic: “Does that mean we have to work for two more years?! Nooooooo!”
But fear not! In 2015, a different government came into power and swiftly reversed the decision. So, 65 remains the standard age for receiving your full OAS benefits, though some Canadians may still have nightmares about that 67 number.
Retirement Age: It’s Up to You!
Here’s the truth: retirement doesn’t have to be at 65. Or 67. Or even 87. The reality is, you can retire whenever you want! If you hit it big with crypto (or the lottery), you could be sipping margaritas at 45. But most Canadians plan for the traditional age range of 60 to 70, with some strategic decision-making around government pensions.
So, whether you’re clocking out early to start your alpaca farm or working until your 70s because you just love the thrill of quarterly reports, the choice is yours.
The Lowdown on CPP and OAS
Here’s a quick rundown of the major players in Canada’s retirement game:
- Canada Pension Plan (CPP): You can start receiving it as early as age 60 or as late as 70. If you take it at 60, you’ll receive less each month (by about 0.6% for each month before 65). If you delay it until 70, you get a sweet bonus of 8.4% per year beyond age 65. Waiting could mean more money for Starbucks instead of Timmies, or longer snowbird trips to Florida!
- Old Age Security (OAS): You can take OAS at age 65, but like CPP, you can delay it until 70 and get a 36% bump in your monthly payments. But be warned: if you’re a higher-income retiree, OAS may be subject to a little thing called the “OAS Clawback”.
Consequences of Taking Benefits Early or Late
Taking your CPP or OAS early can be tempting—after all, who wouldn’t want to cash in as soon as possible? But the long-term consequences can mean lower monthly income for the rest of your retirement. It’s kind of like leaving a buffet before dessert—you get something now, but miss out on what’s to come!
On the flip side, delaying benefits means more money each month later on. It’s like saving the best bite of cake for the end. But it’s not for everyone, so whether you go early or late depends on your personal financial situation, your health, and how many rounds of golf you plan to play each week in retirement.
Is the Retirement Age Going Up?
While there’s no current plan to raise the official retirement age, there are always whispers about it in the news. With Canadians living longer (and healthier) lives, it makes sense that governments might start nudging the retirement age upward. In fact, many countries have already done so—take a look at France and Germany, where the retirement age is creeping past 65.
But before you panic, rest assured that any changes to the retirement age would likely be gradual, giving you time to adjust (and possibly extend that golf membership).
Fun Facts About Retirement in Canada
- Did you know that the average Canadian retires at age 63? But don’t worry, there’s no “mandatory” retirement age in Canada—you can keep working as long as you want!
- When you turn 71, you’ll be required to convert your RRSP into a RRIF (Registered Retirement Income Fund) or buy an annuity, meaning your retirement savings start paying you back. (Kind of like that Netflix subscription you forgot to cancel, but in reverse.)
- Only about 37% of Canadians are “fully retired” by age 65. The rest are either still working or semi-retired, so you’re not alone if you keep dabbling in work after age 65!
In Conclusion: 65 or 67?
So, is retirement age 65 or 67 in Canada? Officially, it’s still 65 for both CPP and OAS, but it’s really up to you when you retire. Whether you take your benefits early, wait for the bonus of delaying, or keep working just because you love it, retirement age is whatever you decide it to be.
Want to figure out your ideal retirement age? Use our Retirementize Calculator to see how your benefits change depending on when you cash in those sweet government pensions!