What is OAS? Everything You Need to Know About Canada's Old Age Security
Old Age Security (OAS) is an important part of Canada's retirement program, providing basic financial support for seniors across the country. But what exactly is OAS, and how does it fit into your retirement strategy? Whether you're planning your retirement or already retired, understanding OAS can help you secure a more comfortable future. Let's dive into it!
Introduction to Old Age Security (OAS)
OAS is one of the Canadian government’s largest social programs aimed at ensuring financial security for seniors. Introduced in 1952, it was designed to provide a basic income to Canadians aged 65 and older, regardless of their work history. Unlike the Canada Pension Plan (CPP), which is based on earnings and contributions, OAS is residency-based, meaning you qualify based on how long you’ve lived in Canada.
For many Canadians, OAS forms a critical piece of their retirement income strategy alongside CPP, RRSP, TFSA, personal savings, and employer pensions. Whether you're planning to retire early or looking for ways to optimize your income, integrating OAS into your strategy is essential. And remember, tools like the Retirementize income calculator can help you plan your withdrawals, ensuring you make the most of your retirement years.
Eligibility for OAS
To receive OAS benefits, you need to meet specific age and residency requirements. Generally, you must:
- Be at least 65 years old.
- Have lived in Canada for at least 10 years after the age of 18 to receive a partial OAS.
- Reside in Canada for 40 years after turning 18 to receive full OAS.
But there’s more! If you've lived abroad or plan to retire internationally, don't worry. Canada has social security agreements with many countries, making it easier to qualify for OAS even if you've spent part of your life outside the country.
OAS for Canadians Living Abroad
If you plan to live outside of Canada during your retirement, you may still be eligible for OAS payments. According to Service Canada, as long as you've lived in Canada for at least 20 years after the age of 18, you can continue receiving your payments while living abroad. Plus, Canada has agreements with over 50 countries that allow you to combine time spent living in those countries to meet the residency requirement.
How Much Can You Receive from OAS?
The maximum monthly OAS payment in 2025 is approximately $727.67 for people between 65 and 74, it then goes up by 10% to $800.44 when you are 75 and older. The exact amount you receive depends on how long you’ve lived in Canada. If you've lived in Canada for the full 40 years, you'll receive the maximum. If not, your payments will be prorated based on the number of years of residency.
For example, if you've only lived in Canada for 20 years, you'll receive half of the maximum benefit. You can calculate your exact OAS benefits using the Retirementize income calculator to better understand how this fits into your overall retirement income.
OAS Clawback: What You Need to Know
High-income earners beware! The OAS Clawback (also known as the OAS Pension Recovery Tax) reduces OAS payments for retirees with a net income above a certain threshold. In 2025, the clawback begins at $93,454 in net income and reduces your OAS benefits by 15% for every dollar above this threshold.
If your income exceeds the $157,490 mark, your OAS benefits could be fully clawed back. Strategic income planning, such as income-splitting with your spouse or timing your RRSP withdrawals, can help minimize or avoid the clawback altogether. Check out our OAS Clawback guide for tips on how to keep more of your benefits.
Deferring OAS: Should You Wait?
One of the great features of OAS is that you can defer your payments up to age 70. For each month you delay your OAS, your payment increases by 0.6%, giving you a total boost of 36% if you wait until age 70. This can be a smart move if you’re still working or expect to have other sources of income between ages 65 and 70.
But deferring isn’t for everyone! If you need the income earlier or have health concerns that might affect your life expectancy, starting OAS at 65 might make more sense.
Is There Survivor Benefits?
Sorry Canadians, there is no survivor benefit for OAS. It is a program for individuals and once you snooze, you lose :-(
There are survivor benefits for CPP, so check out if you qualify.
How to Apply for OAS
Applying for OAS is simple and can be done online through the Service Canada website or by paper application. Some people are automatically enrolled, but if you aren't, you can apply up to 11 months before you turn 65. It's always best to apply early to avoid delays in receiving your payments.
Make sure you have all your important documents ready, such as your Social Insurance Number (SIN), proof of residency, and details of any time spent living abroad.
Fun Facts
- Over 6 million Canadians receive OAS benefits!
- OAS payments are adjusted quarterly for inflation, helping seniors keep up with rising living costs.
- The maximum monthly benefit has increased by 300% since the program began in 1952!
- Nearly 600,000 retirees face some form of OAS clawback every year.
Conclusion
Old Age Security is a vital component of Canadian retirement planning, providing essential financial support to millions of seniors. Whether you're approaching 65 or planning for the future, understanding how OAS fits into your retirement income strategy is key. From eligibility and payment amounts to the dreaded OAS clawback, knowing the ins and outs of OAS can help you maximize your benefits.
To ensure you're on the right track, don't forget to use the Retirementize income calculator. It's a powerful tool designed to help you optimize your withdrawals and create a retirement plan that works for you!