Is Retirement Age 65 or 67 in Canada?
by Mark Briggs - October 2024
The retirement age for Canadians is 65! Or is it...? Why is 65 considered the traditional retirement age? Where did 67 come from? And, most importantly, do you actually have to retire at either age?
The answer is a little more interesting than you might expect. In Canada, there is no single mandatory retirement age. You can choose when to stop working, while government benefits such as the Canada Pension Plan (CPP) and Old Age Security (OAS) have their own eligibility and start-date rules.
Why Do Canadians Think It's 67?
Let's rewind a bit.
In 2012, the federal government announced plans to gradually increase the age of eligibility for OAS from 65 to 67, beginning in 2023. The change attracted considerable attention because it would have meant that younger Canadians would have waited longer to begin receiving OAS.
In 2016, the federal government reversed that change. As a result, OAS eligibility remains at age 65.
So where did 67 come from? It is still an important number in retirement planning because CPP can be delayed until age 70, and because many people use ages 65, 67, or 70 as milestones when coordinating employment and retirement income.
There Is No Mandatory Retirement Age in Canada
Here's the important distinction: government benefit eligibility is not the same thing as your retirement age.
You don't have to retire at 65. You don't have to retire at 67. You don't even have to retire at 60 or 70.
If you have enough financial resources, you could retire much earlier. If you enjoy your career or need additional income, you can continue working well beyond 65.
You could even retire, return to work, take a break, and then retire again. Retirement is less of a single event and more of a transition that can look different for everyone.
Of course, your ability to retire depends on your savings, pensions, government benefits, spending, taxes, health, and other financial circumstances.
The Lowdown on CPP and OAS
Two of the most important government retirement benefits for Canadians are CPP and OAS. But they have different rules.
- Canada Pension Plan (CPP): You can start CPP as early as age 60 or delay it until age 70. Starting before 65 permanently reduces the monthly pension. Starting after 65 permanently increases it. The adjustment is 0.6% per month for starting before 65 and 0.7% per month for delaying after 65, subject to the applicable maximums.
- Old Age Security (OAS): You can generally start OAS at age 65 or voluntarily delay it until as late as age 70. Delaying OAS increases the monthly payment by 0.6% for each month of delay, up to a maximum increase of 36% at age 70.
There is an important difference here: CPP is based largely on your contributions and earnings history, while OAS is a government benefit with eligibility based primarily on age and residence requirements.
What Happens If You Take CPP or OAS Early?
Taking government benefits as soon as you become eligible can provide income sooner, but the trade-off is a permanently smaller monthly benefit for CPP and, depending on the timing, potentially a smaller amount of lifetime OAS income compared with delaying.
For CPP, starting at age 60 results in a substantial permanent reduction compared with starting at 65. The reduction is 0.6% for each month before 65, which can amount to a maximum reduction of 36% at age 60.
OAS cannot normally begin before 65, so there is no equivalent "early OAS" decision. Instead, you decide whether to begin at 65 or voluntarily delay it, potentially increasing the eventual monthly payment.
What Happens If You Delay CPP or OAS?
Delaying government benefits can result in significantly higher monthly income later in retirement.
CPP increases by 0.7% for every month after age 65 that you delay starting it, up to age 70. That means delaying CPP from 65 to 70 can increase the monthly pension by up to 42%.
OAS increases by 0.6% for every month after age 65 that you delay it, up to age 70. The maximum increase is therefore 36%.
Delaying is not automatically the right decision for everyone. The appropriate timing depends on factors such as your financial resources, expected longevity, health, tax situation, spouse or survivor considerations, and how much income you need in the early years of retirement.
Think of it as a trade-off: taking benefits earlier provides money sooner, while delaying can provide a larger guaranteed monthly income later.
Is the Retirement Age Going Up?
There is currently no general Canadian rule requiring people to retire at 65 or 67.
The confusion often comes from proposals to change government benefit eligibility rather than from an actual mandatory retirement age.
Governments can change pension legislation, of course, but any proposed changes should be distinguished from the rules that are actually in effect. For retirement planning, it is important to use the current CPP and OAS rules rather than assuming that a previously proposed change will happen.
What About Retirement at 65?
So why does age 65 remain such a big deal?
There are several reasons. Age 65 has traditionally been associated with retirement in Canada, OAS normally begins at 65, and many workplace pensions use 65 as an important milestone.
But age 65 doesn't have to be the date you stop working.
You could retire at 55 and wait until 65 to start OAS. You could retire at 60 and start CPP. You could continue working to 70 while delaying both CPP and OAS. Or you could choose a completely different combination.
What Happens to Your RRSP at Age 71?
Another important retirement milestone is age 71.
By the end of the calendar year in which you turn 71, you generally must convert your RRSP into a RRIF, purchase an eligible annuity, or otherwise deal with the RRSP according to the applicable rules.
Once you have a RRIF, minimum withdrawals generally begin the following year. Those withdrawals are taxable income and should therefore be incorporated into your retirement-income plan.
In other words, 71 isn't a mandatory retirement age either. It's simply an important age for managing registered retirement savings.
Fun Facts About Retirement in Canada
- There is no general mandatory retirement age in Canada. You can continue working beyond 65 if you choose and your employment circumstances allow it.
- CPP can start as early as age 60 and be delayed until age 70. The amount changes permanently depending on when you start.
- OAS can be delayed from age 65 to 70. Each month of delay increases the eventual OAS pension by 0.6%, up to 36%.
- Age 71 is another important retirement milestone because your RRSP generally must be converted or otherwise dealt with by the end of the year in which you turn 71.
- You don't necessarily have to start CPP and OAS at the same time. Their start dates can be considered separately as part of your retirement-income strategy.
So, Is Retirement Age 65 or 67?
Neither.
There is no single mandatory retirement age in Canada.
Age 65 remains an important milestone because it is the normal starting age for OAS and has long been associated with retirement. Age 67 is not the current standard OAS eligibility age.
Instead of asking, "Should I retire at 65 or 67?" a better retirement planning question may be:
"When should I stop working, and when should I start each of my retirement-income sources?"
Those two decisions don't have to happen at the same time.
How Retirementize Can Help
Choosing a retirement age is about more than picking a number. You need to consider how your employment income, CPP, OAS, pensions, investments, withdrawals, taxes, inflation, and spending work together.
The Retirementize Calculator can help you model different retirement dates and compare different government-benefit strategies.
You can explore scenarios such as:
- Retiring before age 65
- Retiring at 65
- Working beyond age 65
- Starting CPP at 60, 65, or 70
- Starting OAS at 65 or delaying it to 70
- Different RRSP and RRIF withdrawal strategies
- Different retirement spending levels
- The impact of taxes on your retirement income
In Conclusion: 65 or 67?
So, is the retirement age 65 or 67 in Canada?
The answer is neither. You don't have to retire at 65 or 67.
What matters is choosing a retirement date and government-benefit strategy that fits your financial circumstances and goals.
CPP can begin between 60 and 70, while OAS can begin at 65 or be delayed until 70. You can also continue working while receiving these benefits, subject to the applicable rules and tax considerations.
Retirement planning is therefore less about finding one magic retirement age and more about finding the combination of work, savings, pensions, government benefits, and spending that works for you.
Want to see how different retirement ages affect your plan? Use the Retirementize Calculator to compare your options and see how your retirement income can change depending on when you stop working and when you begin collecting CPP and OAS.
