Canada: OAS & CPP Retirement Age Explained

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Canada's Old Age Security (OAS) and Canada Pension Plan (CPP) provide crucial retirement income. Understanding the eligible retirement ages for each can significantly impact your financial planning.

OAS Retirement Age

The standard age to start receiving OAS benefits is 65. However, you can choose to defer receiving OAS payments for up to 60 months (5 years) after age 65. Deferring OAS can result in a higher monthly payment.

  • Standard Age: 65
  • Deferral Option: Up to 5 years after 65
  • Benefit of Deferral: Higher monthly payments

Eligibility for OAS

To qualify for OAS, you must be 65 or older and a legal resident of Canada. You must also have resided in Canada for at least 10 years since the age of 18.

CPP Retirement Age

The standard age to begin receiving CPP retirement pension is 65. However, you have the flexibility to start receiving it as early as age 60 or as late as age 70. Starting CPP earlier than 65 results in a reduced monthly payment, while starting it later increases the payment.

  • Standard Age: 65
  • Early Start: Age 60 (reduced payments)
  • Late Start: Age 70 (increased payments)

Factors to Consider

Deciding when to start receiving CPP depends on various factors, including your financial needs, health, and life expectancy. If you need the income earlier or have health concerns, starting at 60 might be suitable. If you can afford to wait and expect to live a long life, deferring CPP until 70 could maximize your benefits.

OAS vs. CPP: Key Differences

While both OAS and CPP provide retirement income, they have distinct characteristics.

  • OAS: Funded by general tax revenue. Residency-based.
  • CPP: Funded by contributions from employees, employers, and self-employed individuals. Contribution-based.

Planning Your Retirement

Consider these points when planning your retirement:

  • Assess Your Financial Needs: Determine your expenses and income sources.
  • Consider Your Health: Your health can influence your retirement timeline.
  • Seek Professional Advice: A financial advisor can help you make informed decisions.

Understanding the retirement ages and options for OAS and CPP is crucial for effective retirement planning. Take the time to assess your situation and make informed decisions that align with your goals.