02/21/2024
Delaying Old Age Security (OAS): Is it for you?
As of January 2024, in Canada, seniors aged 65-74 can receive $713.34 in monthly OAS payments. However, the government can claw back part of these payments if your income is above $90,997, and will claw back the entire payment if your income is above $148,065. If you fall below the minimum claw back threshold, delaying your OAS payment may in fact not be financially beneficial.
Let’s briefly go through the math:
Once you become eligible to receive OAS, you can delay receiving these payments for up to a maximum of 60 months.
You can receive an increase of .6% to your OAS payments for every month that you delay taking them.
Considering an annual OAS payment of approximately $8,560 (12 months x $713.34, being the current maximum monthly payment) at age 65, you could choose to delay for 1 year and start receiving $9,176 ($8,560 plus an additional 7.2%) at age 66 instead. This amounts to an extra $616 for each year you delay (keep in mind OAS does increase annually but we are keeping amounts constant to make the example easier to follow).
However, by delaying the payment for that one year, you are foregoing receiving $8,560. It will take approximately fourteen years of increased OAS payments after the first delayed year to make up for that one year of delayed payments.
In other words:
$8,560 divided by $616 more per year = 13.89 years ~ to make up for delaying 1 year of OAS.
You also need to consider that you have lost the opportunity to invest any portion of your OAS payment if you have delayed.
There are a number of additional considerations for each personal circumstance, so it’s important to speak to a professional before making your decision.
Considering delaying? Don't hesitate to reach out [email protected]
