CPP & OAS Guide for Canadian Retirement Income

When to start, how much you get, and the strategies that can add tens of thousands to your lifetime benefits.

22 min read April 2026Pillar Guide

CPP and OAS together form the base layer of Canadian retirement income. For many retirees, they make up 40–60% of total income. Getting the timing wrong on either one can cost you $50,000 or more over your lifetime.

This guide breaks down both programs: what they pay, when to start them, how the OAS clawback works, and the specific strategies you can use to maximize your combined government benefits. We also link to SimRetire's calculators so you can model your own scenario.

Overview of CPP and OAS Benefits

Canada Pension Plan (CPP)

  • • Earnings-based: you contribute, you earn
  • • Subject to your work history and contributions
  • • Standard age: 65 (early: 60, late: 70)
  • • 2026 max at 65: ~$1,364/month
  • • Indexed to CPI annually

Old Age Security (OAS)

  • • Residency-based: no work history needed
  • • Available at 65 (deferrable to 70)
  • • 2026 max: ~$727/month (age 65–74)
  • • Subject to clawback above ~$93,454
  • • 10% bonus at age 75

Here's what many people miss: CPP is based on your earnings history, while OAS is based on how long you've lived in Canada. You need 40 years of Canadian residency after age 18 for the full OAS pension. If you immigrated or lived abroad, you may get a partial amount.

When to Start CPP and OAS: Early vs Late

CPP Timing

You can start CPP as early as 60 or as late as 70. Starting early reduces your pension by 0.6% per month before 65 (a 36% cut at 60). Delaying past 65 increases it by 0.7% per month (a 42% bonus at 70).

CPP at Different Starting Ages

Age 60

-36%

~$873/month

Age 65

100%

~$1,364/month

Age 70

+42%

~$1,937/month

The "breakeven" point — where delaying pays off — typically falls around age 74–78, depending on your specific situation. If you live past the breakeven age, you come out ahead by waiting. If you have health concerns or need the cash now, starting earlier may make sense.

OAS Timing

OAS works similarly but with different numbers. You can defer from 65 to 70 for a 0.6% per month increase — a 36% bonus at 70. The breakeven is around age 82–83.

But there's a twist: if your income is above the OAS clawback threshold (~$93,454 in 2026), you lose 15 cents of OAS for every dollar over. If your income exceeds ~$151,668, your OAS is fully clawed back. Deferring OAS makes the most sense if you expect your income to drop below the clawback zone later, since the higher deferred amount has more room to survive partial clawback.

OAS Clawback and Income Planning

The Clawback Zone

Threshold

$93,454

clawback starts

Rate

15%

per dollar over threshold

Full Clawback

~$151k

OAS drops to $0

The clawback is based on your net income on line 23600 of your tax return. RRIF withdrawals, pension income, rental income, and capital gains all count. TFSA withdrawals do not. That's why income smoothing — pulling from different account types in different years — is so powerful.

Strategies to Avoid or Reduce Clawback

1

RRSP Meltdown before 65: Draw down RRSP/RRIF at a controlled rate before OAS kicks in, reducing forced withdrawals during OAS years.

2

Pension income splitting: Split up to 50% of eligible pension income with your spouse to keep both incomes below the threshold.

3

TFSA as top-up: Use TFSA withdrawals for variable expenses. They don't appear on your tax return and won't trigger clawback.

How SimRetire Tools Help You Model CPP/OAS Decisions

Timing decisions on CPP and OAS are personal — they depend on your health, other income, marital status, and longevity expectations. Our calculators let you model your exact scenario:

OAS Deferral Optimizer

Find your personal breakeven age and see how deferral affects your total lifetime OAS income.

Open Calculator

CPP Breakeven Calculator

Compare CPP at 60, 65, and 70. See the crossover age where delaying starts to pay off.

Open Calculator

Further Reading

We've published several deep-dive articles on CPP and OAS topics:

Related tools

Frequently Asked Questions

How much does OAS increase if I delay to 70?

OAS increases by 0.6% for each month you delay past 65, up to a maximum of 36% at age 70. On the 2026 maximum pension, that's roughly an extra $262/month — or $3,144/year — for life.

What is the CPP breakeven age?

It depends on your specific amounts, but typically the breakeven between starting CPP at 60 vs 65 is around age 74, and between 65 vs 70 is around age 78. Our CPP Breakeven Calculator can give you your exact number.

Can I receive both CPP and OAS?

Yes. CPP and OAS are completely separate programs. CPP is based on your work contributions. OAS is based on Canadian residency. Most retirees receive both, and they start at the same or different ages depending on your strategy.

Does CPP count toward OAS clawback income?

Yes. CPP payments are taxable income and count toward the net income threshold that triggers OAS clawback. This is one reason some people defer OAS past 65 — to let their other income sources (RRIF, CPP) settle before adding OAS on top.

SimRetire Editorial Team

Canadian Retirement Experts

This guide has been rigorously reviewed by our editorial team to ensure 100% compliance with 2026 Canadian tax laws and CRA guidelines. Our mission is to provide accurate, independent, and accessible financial education for all Canadians.

Fact Checked Updated March 2026