There’s a big payoff if you can wait till age 70 to take CPP and OAS. Here’s when it does — or doesn’t — make sense

Q: How much more can I expect to get by deferring CPP (Canada Pension Plan) and OAS (Old Age Security) until age 70, and is it worth it?

A: The Canada Pension Plan (CPP) is a social insurance plan funded by the contributions of employees, employers and self-employed people, as well as the revenue earned on CPP investments. It provides income replacement to contributors and their families in the event of retirement, disability or death. 

To qualify for a CPP retirement pension, you must be at least 60 years old and have made at least one valid contribution to the CPP from work you did in Canada. Credit splitting, where pension contributions earned by spouses are combined and divided equally after separation or divorce, could also allow one partner to be eligible even if they did not make CPP contributions.

The amount of your CPP retirement pension depends on different factors, including your average earnings, how much and for how long you contributed to CPP and at what age you start receiving your pension. Once started, CPP is adjusted for inflation; based on changes to the Consumer Price Index, CPP benefits increased by two per cent for 2026.

You must apply to begin receiving CPP — it’s not automatic. The earliest Canadians can begin receiving CPP is age 60, but there’s a big payoff if you can wait until 70. Starting earlier means smaller monthly payment amounts, whereas starting later means larger monthly payment amounts.

Whether it’s worth deferring really comes down to your overall health and your financial needs. If you’re nearing retirement and don’t have reliable sources of retirement income, deferring likely won’t be an option, and taking CPP and OAS at 60 or 65 often makes the most sense. If you’re in poor health or expect to be, deferring also might not make sense, since you’ll want to use the money to enjoy what time you have.

However, if you can afford to defer and you expect to live well into your eighties and beyond, you should consider waiting as long as possible to receive CPP and OAS, which will lower your risk of outliving your money. You can find life expectancy calculators online that offer personalized estimates based on factors like your lifestyle, health and family history.

If you start your CPP pension before age 65, payments decrease by 0.6 per cent each month (or 7.2 per cent per year), up to a maximum reduction of 36 per cent if you start at age 60. If you start your CPP pension after age 65, payments increase by 0.7 per cent each month they are delayed (8.4 per cent per year), up to a maximum increase of 42 per cent if started at age 70.

“It’s a really good deal, but the majority of people are claiming their pension before age 65,” says Bonnie-Jeanne MacDonald, director of financial security research at the National Institute on Ageing at Toronto Metropolitan University.

Old Age Security (OAS), which you can claim if you are 65 and older, offers a maximum monthly payment of $742.31 for those 65 to 74. The amount you could receive is determined by your income and the benefit is considered taxable income. You can also delay OAS up to age 70 and get more out of it; the longer you wait, the bigger your monthly payment. The monthly amount increases by 0.6 per cent for each month you wait, so if you hold off till age 70, that’s a 36 per cent increase. Just keep in mind that if your 2026 income (including OAS and CPP payments) is over $95,323, you will need to repay part or all your 2026 OAS pension when you file your tax return in 2027.

The maximum monthly amount for both CPP and OAS is reached when you turn 70, so there’s no benefit to waiting beyond that.

In short, for people who are still working and/or have retirement savings that can cover 10 years of income, it’s a good idea to consider deferring CPP and/or OAS. For those who won’t have enough income to make ends meet or are in poor health, taking CPP and OAS at 60 or 65 makes the most sense. Note that Quebec has its own plan, the Quebec Pension Plan.

This Toronto Star article was legally licensed by AdvisorStream.