How to Time CPP and OAS to Maximize Retirement Income in Canada

For most Canadians in good health, delaying CPP past 65 — ideally all the way to 70 — and deferring OAS by the same amount produces the highest possible lifetime pension income, because both programs permanently raise your monthly payment for every month you wait. The trade-off is straightforward: you need other income to bridge the gap during the years before those larger cheques begin, which means the decision is really about sequencing your portfolio withdrawals alongside your government benefits. Getting that sequencing right is one of the most financially consequential choices in a retirement plan.

Why the Start Date Has Such a Large Payoff

CPP and OAS are not one-time deposits. They are guaranteed, inflation-indexed income streams that pay you for as long as you live — which, for a healthy 65-year-old Canadian, could mean two or three decades. According to Statistics Canada, a 65-year-old Canadian woman has a remaining life expectancy of approximately 22 years, and a 65-year-old man approximately 19 additional years. When you lock in a permanently higher monthly benefit and collect it across that kind of time horizon, even a modest difference in start date translates into a very large difference in total lifetime income.

"Most people treat their CPP and OAS start dates as fixed points, but they are actually the most powerful levers in a retirement income plan. A single year of patience at 65 can be worth more than years of portfolio gains."

— Marc Pineault, retirement planner in London, Ontario

CPP Timing — The Math Behind Waiting

The Government of Canada's CPP rules create a direct incentive to wait. You can start collecting as early as age 60, but every month before your 65th birthday reduces your payment by 0.6% — meaning a full early start at 60 permanently cuts your benefit by 36%. The upside of waiting is equally significant: every month you delay past 65 raises your payment by 0.7%, so deferring to 70 increases your monthly CPP by 42% above what you would have received at 65.

To translate that into dollar terms: the maximum CPP retirement pension at age 65 was approximately $1,365 per month in 2025, according to the Government of Canada. Most retirees receive considerably less than the maximum, depending on their contribution history, but the percentage mechanics apply to everyone the same way. At 70, that maximum rises to roughly $1,938 per month.

The Breakeven Calculation

The most common objection to waiting is the concern about not living long enough to recoup the benefits missed. That is worth calculating honestly.

Suppose your CPP at age 65 would be $1,000 per month. Delaying to 70 raises it to $1,420 per month. Over those five years, you forgo $60,000 in CPP payments (60 months × $1,000). Your additional monthly income from waiting is $420. Recovering that $60,000 requires $60,000 ÷ $420 = approximately 143 months past age 70, or roughly 12 years — placing the breakeven point at about age 82.

According to Statistics Canada, the average 65-year-old Canadian man is expected to live to approximately 84, and the average woman to about 87. Both figures are past that breakeven point, which is why the math generally favours deferral for people in average or better health.

When Earlier CPP Makes Sense

Delaying is not the right answer for everyone. If you have a health condition that meaningfully shortens your expected lifespan, the breakeven shifts in favour of starting sooner. If your savings are limited and you genuinely need the cash flow now, starting CPP earlier prevents drawing down your portfolio at an unsustainable rate. The decision should reflect your actual health picture and income needs, not just population averages. Our CPP timing guide walks through the breakeven analysis in more depth for several different health and income scenarios.

OAS Timing — A Separate but Connected Decision

Old Age Security follows the same basic logic as CPP, but the deferral rate is slightly different. The standard OAS start age is 65, and each month you wait past 65 permanently adds 0.6% to your benefit — a 36% increase if you defer the full five years to age 70. According to Service Canada, the maximum OAS pension for July to September 2026 is $751.97 per month for recipients aged 65 to 74, and $827.17 per month for those 75 and older (reflecting the 10% top-up introduced in 2022). Deferring from 65 to 70 would raise that $752 to roughly $1,023 per month before any inflation adjustments, and like CPP, the higher amount is then indexed quarterly to the Consumer Price Index for life.

The OAS Clawback Factor

Higher-income retirees face an additional consideration: the OAS recovery tax, commonly called the clawback. The CRA claws back 15 cents of OAS for every dollar of net income above $95,323 — the 2026 threshold, which is indexed annually. The entire OAS benefit is eliminated once net income reaches roughly $155,000.

For retirees who expect substantial RRIF withdrawals, rental income, or corporate dividends, delaying OAS can reduce the number of years the benefit is exposed to that clawback risk. Alternatively, drawing down RRSP balances during the years before OAS begins — often called the RRSP meltdown window — can lower future taxable income and help keep annual net income below the clawback threshold. Our RRSP meltdown guide explains how that sequencing works in practice for Ontario retirees. For a closer look at the clawback thresholds and the income-smoothing strategies available, the OAS clawback strategy guide covers the mechanics in detail.

A Worked Example — Coordinating CPP, OAS, and a Portfolio

Here is how the timing decision plays out in a concrete scenario.

The setup: A 65-year-old retiree in Ontario with an $850,000 investment portfolio (a combination of RRSP and non-registered savings) whose CPP entitlement at age 65 is $900 per month.

Option A — Begin both CPP and OAS at 65:

• CPP: $900/month
• OAS: $752/month
• Combined government income: $1,652/month ($19,824/year)
• The portfolio is drawn on for living expenses beyond what government income covers, but the draw rate is lower because benefits start immediately

Option B — Delay both CPP and OAS to age 70:

• CPP at 70: $900 × 1.42 = $1,278/month
• OAS at 70: $752 × 1.36 = $1,023/month
• Combined government income from age 70: $2,301/month ($27,612/year)
• Monthly advantage over Option A from age 70 onward: $649/month, permanently
• Bridge cost from ages 65–70: The retiree needs approximately $1,652/month from their portfolio to replace the missing government income — roughly $99,100 in additional withdrawals over five years

Breakeven calculation: At $649/month extra income in Option B, recovering the $99,100 bridge cost takes approximately 153 months — about 12.7 years past age 70. The breakeven point falls around age 82 to 83. After that, every additional month of life produces more cumulative lifetime income in Option B than Option A.

This illustration holds tax rates, investment returns, and inflation constant for simplicity. Actual outcomes depend on those variables, and the analysis changes meaningfully when a spouse's income and benefits are factored in.

Using Portfolio Withdrawals to Bridge the Gap

The practical challenge in delaying CPP and OAS is having enough savings to comfortably fund those bridge years. How you draw on your portfolio during that time also matters for your long-term tax position.

A common approach is to draw down RRSP or RRIF assets during the bridge period rather than letting them accumulate. This accomplishes two things simultaneously: it funds the income you need while CPP and OAS are deferred, and it reduces the size of your registered accounts before mandatory RRIF withdrawals begin at age 71. Smaller registered balances at 71 mean lower mandatory minimum withdrawals, which can reduce annual taxable income and limit future OAS clawback exposure. The RRIF withdrawal strategy guide covers minimum withdrawal schedules and tax-smoothing options in detail.

Non-registered savings can also contribute during the bridge period. Capital gains from non-registered investments are taxed at a lower effective rate than RRSP withdrawals, so blending draws across account types can reduce the household's annual tax bill during those bridge years.

How Tax Interacts with Timing

Both CPP and OAS are fully taxable as ordinary income in the year you receive them. Starting both programs at 65 while also drawing on a RRIF and selling non-registered investments stacks all of that income into the same tax years — which can push you into a higher bracket or over the OAS clawback line.

Spreading income more evenly across your 60s and 70s, rather than concentrating it, tends to produce better after-tax outcomes. Pension income splitting is one tool that helps: the Income Tax Act allows eligible Canadians to allocate up to 50% of qualifying pension income — including eligible RRIF withdrawals and certain annuity payments — to a lower-income spouse or common-law partner, reducing the household's combined tax bill.

What Shapes the Right Timing for You

There is no single correct answer for CPP and OAS timing. The decision depends on several variables that are unique to each person's situation.

Life expectancy and health. Longevity is the dominant variable. If your health is good and your family history suggests you are likely to reach your mid-80s or beyond, deferral generally makes financial sense. If a serious health condition meaningfully shortens your expected lifespan, an earlier start may produce more total income.

Other guaranteed income. A defined benefit pension, substantial rental income, or required RRIF withdrawals can already place your annual income well above the OAS clawback threshold. In those situations, delaying OAS — or carefully sequencing when different income streams begin — can protect more of the benefit from being clawed back.

Portfolio size. An $850,000 portfolio can absorb five years of bridge withdrawals without significant stress. A smaller portfolio may not have that flexibility, making earlier CPP more practical even if the breakeven math slightly favours waiting.

Spousal situation. Two sets of CPP and OAS benefits, survivor benefit entitlements, and pension splitting opportunities between partners all add complexity — and potential savings — that a solo analysis misses. The right sequencing for a couple depends on both partners' incomes, ages, and health.

Marc Pineault, a retirement planner in London, Ontario, works with retirees and near-retirees on exactly this kind of income sequencing — mapping out the interaction between portfolio withdrawals, government benefits, and annual tax across the full span of retirement. The free retirement planning calculators on this site are a practical starting point if you want to run your own numbers before sitting down with a professional.

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified professional before making any financial decisions.