What is the Old Age Security (OAS) Pension?
The OAS pension is a monthly payment available to eligible Canadians that are 65 or older. To qualify, you must be 65+, either a legal resident or citizen of Canada at the time of approval and have lived in Canada for at least 10 years since the age of 18. For those living outside of Canada, they must have been a citizen or legal resident by the day before they moved, and must have lived in Canada for at least 20 years since turning 18.
To maximize OAS, you must live in Canada for at least 40 years after you turn 18. You can also collect a higher amount if you delay receiving OAS until you are 70. Those that make over a certain dollar figure will face an OAS claw back instead of a higher pension.
What is the Canadian Pension Plan (CPP)?
The CPP is a monthly, taxable pension that replaces a part of your income in retirement. To qualify, you must be at least 60 and have made at lease one valid contribution to the CPP fund.
The amount of CPP benefit is based on how much you contributed during your working years. To maximize this amount, make contributions for a minimum of 39 years between 18 and 65 – and also contribute the maximum allowable amount for 39 years. This maximum amount is set by Canada Revenue Agency. If you make some contributions before 65, you can qualify. However, you unless you maxed out the time and dollar figure, you will not receive the same amount as someone that has done so.
More to Explore
This is a very basic and broad overview to show that maximizing one’s pensions starts many years before retirement. The decisions you make during your working years have a big impact on how much OAS and CPP you can receive. Anyone over the age of 18 should speak with a financial planner or a Service Canada representative periodically to discuss how lifestyle and career choices impact retirement. If you want to live in a van while travelling the desert for five years, for example, is the experience worth the financial impact later in life? There are many paths that lead to a happy, fulfilling career, life and retirement. But when it comes to the CPP and OAS pensions, not all those roads are compatible with federal pension money. Talk to a planner to help ensure you can find the right balance for your needs now, and your future later.
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