For decades, age 65 has been the cornerstone of retirement planning in Canada, marking the moment when Canadians could expect to collect Old Age Security (OAS) and Canada Pension Plan (CPP) benefits. This milestone symbolized the transition from work to leisure, a time to enjoy the fruits of a lifetime of labour. However, as life expectancy increases, living costs rise, and government policies evolve, the concept of retiring at 65 is becoming less certain. In 2025, changes to OAS and CPP, combined with shifting economic and demographic realities, are reshaping how Canadians approach retirement. This 1,500-word article, tailored for a Canadian audience, explores why retiring at 65 is no longer a given, details the incentives and flexibility around OAS and CPP, and provides practical strategies for navigating this new retirement landscape.
The Shifting Retirement Landscape
The traditional retirement age of 65 is losing its relevance due to several key factors. Canadians are living longer—Statistics Canada reports that the average life expectancy is now well into the 80s, with many living into their 90s. This means retirement savings and pensions must stretch further than ever before. At the same time, the cost of living, including housing, healthcare, and daily expenses, continues to climb, putting pressure on retirement funds. According to a 2025 report from the Canadian Association of Retired Persons (CARP), 61% of seniors rely on OAS and the Guaranteed Income Supplement (GIS) as their primary income source, underscoring the importance of these programs.
Economic realities are also driving change. The proportion of Canadians working past 65 has doubled since 2000, with approximately 20% of those over 65 remaining in the workforce, either for financial necessity or personal fulfillment. Government policies are adapting to these trends, encouraging flexibility in when and how Canadians access OAS and CPP. While there’s no current plan to raise the OAS eligibility age to 67—as was proposed and reversed in 2016—the option to delay benefits for higher payouts is reshaping retirement decisions.
Understanding OAS and CPP in 2025
Old Age Security (OAS)
OAS is a government-funded pension available to Canadians aged 65 and older, regardless of employment history. It’s funded through general tax revenues and provides a monthly payment to eligible seniors. For the April to June 2025 quarter, the maximum OAS payment is $727.67 for those aged 65–74 and $800.44 for those 75 and older, reflecting a permanent 10% increase for seniors 75+ introduced in July 2022. Payments are adjusted quarterly based on the Consumer Price Index (CPI) to keep pace with inflation, with a projected 1.0% increase for July–September 2025.
Eligibility requires at least 10 years of residency in Canada after age 18 for a partial pension, or 40 years for the full amount. Seniors can defer OAS up to age 70, increasing their monthly payment by 0.6% per month delayed (up to 36% at age 70). However, high-income earners face the OAS clawback, where benefits are reduced if net world income exceeds $93,454 in 2025, with full repayment at $151,668 (65–74) or $157,490 (75+).
Canada Pension Plan (CPP)
CPP is a contributory pension plan based on earnings and contributions made during working years. The standard age to start receiving CPP is 65, but you can begin as early as 60 (with a reduction of 0.6% per month, up to 36%) or delay until 70 (with an increase of 0.7% per month, up to 42%). In 2025, the maximum monthly CPP payment at age 65 is $1,433.00, though the average payment is closer to $899.67, depending on contribution history.
CPP enhancements, ongoing since 2019, allow higher earners to contribute more for greater future benefits, replacing up to 33.33% of lifetime earnings (up from 25%). This benefits younger workers but also encourages current retirees to work longer to maximize contributions.
Guaranteed Income Supplement (GIS)
GIS provides additional support for low-income OAS recipients. In January–March 2025, the maximum monthly GIS payment for a single senior is $1,086.88, with eligibility based on income below $22,056. GIS is non-taxable and adjusts quarterly for inflation, ensuring low-income seniors maintain purchasing power.
Why Retire at 65? The Case for Flexibility
The option to delay OAS and CPP until age 70 is a game-changer. Delaying CPP increases payments by up to 42%, while deferring OAS boosts payments by up to 36%. For example, a senior deferring OAS from 65 to 70 could see their monthly payment rise from $727.67 to approximately $989.63 (for ages 65–74). Similarly, delaying CPP could increase the maximum payment from $1,433.00 to $2,034.86. These increases can significantly enhance financial security, especially for those with longer life expectancies.
However, delaying isn’t always the best choice. Factors like health, financial needs, and employment status play a role. For instance, those with serious health concerns may prefer earlier payments to enjoy benefits sooner. High-income earners might delay to avoid OAS clawbacks, while low-income seniors may need immediate GIS support, as it’s unavailable during OAS deferral.
Working past 65 is also increasingly common. Statistics Canada notes that 1 in 5 seniors now work, driven by financial needs, social engagement, or personal fulfillment. Conservative Leader Pierre Poilievre has promised to maintain the OAS and CPP eligibility age at 65 and increase the tax-free income threshold for working seniors to $25,000, offering further incentives to stay employed.
State of Retirement in 2025: A Snapshot
The following table summarizes key details for OAS, CPP, and GIS in 2025:
|
Program |
Eligibility Age |
Maximum Monthly Payment (2025) |
Deferral Benefits |
Income Considerations |
Notes |
|---|---|---|---|---|---|
|
OAS |
65+ | $727.67 (65–74), $800.44 (75+) |
+0.6%/month, max 36% at 70 |
Clawback above $93,454; full repayment at $151,668 (65–74) or $157,490 (75+) |
Funded by taxes, residency-based. |
|
CPP |
60–70 (65 standard) |
$1,433.00 (at 65) |
+0.7%/month, max 42% at 70; -0.6%/month if before 65 |
Based on contributions and earnings. |
Enhancements increase future payouts. |
|
GIS |
65+ (with OAS) |
$1,086.88 (single, Jan–Mar 2025) |
Not available during OAS deferral |
Income below $22,056 (single). |
Non-taxable, for low-income seniors. |
Source: Canada.ca, 2025 data.
Strategies for Maximizing Your Pension Benefits
To make the most of OAS and CPP in 2025, consider these strategies:
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Assess Your Health and Longevity: If you expect to live into your 80s or beyond, delaying OAS and CPP can yield higher lifetime benefits. Consult a financial planner to model different scenarios.
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Minimize OAS Clawbacks: High-income seniors can reduce taxable income by splitting pension income with a spouse, contributing to a Registered Retirement Savings Plan (RRSP) until age 71, or using Tax-Free Savings Accounts (TFSAs) for non-taxable investment income.
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Work Longer if Feasible: Continuing to work boosts CPP contributions and may allow you to delay OAS/CPP, increasing future payments. It also provides social and financial benefits.
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Apply Early for GIS if Needed: Low-income seniors should apply for OAS at 65 to access GIS, as deferring OAS means forgoing GIS during that period.
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Monitor Payment Dates: CPP and OAS payments are typically deposited in the last week of each month (e.g., January 29, February 26, 2025). Set up direct deposit via My Service Canada Account for reliability.
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Stay Informed on Policy Changes: While the OAS eligibility age remains 65, economic pressures could prompt future debates about raising it. Check official sources like Canada.ca for updates.
Addressing Concerns and Misconceptions
Many Canadians worry about the sustainability of OAS and CPP, especially after a 2012 proposal to raise the OAS age to 67 was reversed in 2016. The Canadian Association of Retired Persons has called OAS a “lifeline under threat,” citing potential government cost-cutting. However, a 2012 Parliamentary Budget Officer report found OAS sustainable without major changes. Political promises, like those from Pierre Poilievre to maintain the age 65 threshold, aim to reassure seniors, but long-term demographic pressures may spark renewed discussions.
Another concern is fairness. Some Canadians, like those who lost family members before collecting benefits, feel penalized by a system that rewards longer lifespans. Others argue that OAS and GIS payments ($727.67–$1,086.88 monthly) barely cover rising costs like rent, with one X user stating, “You don’t give enough OAS to even cover a person’s rent. How can you say you’re keeping up with inflation?”. These sentiments highlight the need for careful financial planning and advocacy for robust pension support.
The New Retirement Mindset
Retirement in Canada is no longer a fixed milestone at 65—it’s a personal journey shaped by health, finances, and lifestyle goals. The flexibility to start CPP between ages 60 and 70, defer OAS for higher payments, and continue working allows Canadians to tailor their retirement plans. For some, retiring at 60 with reduced CPP might suit an early exit from the workforce. For others, working into their 70s while deferring benefits maximizes income and engagement.
To navigate this new reality, Canadians should:
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Use the OAS Benefits Estimator on Canada.ca to project payments.
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Consult financial advisors to optimize RRSP, TFSA, and pension strategies.
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Stay active in the workforce if it aligns with personal and financial goals.
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Advocate for policies that protect pension sustainability and fairness.
The era of retiring at 65 is fading, replaced by a more dynamic approach. Whether you choose to retire at 60, 65, or 70, the key is informed planning. By understanding OAS, CPP, and GIS changes in 2025, Canadians can build a secure, flexible retirement that suits their unique needs.
