For generations, age 65 defined retirement in Canada, the point when most people left the workforce and began relying on public pension benefits. But that fixed benchmark is evolving. With longer life expectancy, rising living costs, and shifting government priorities, a more flexible retirement system has emerged—one that gives Canadians greater control over when and how they collect Old Age Security (OAS) and Canada Pension Plan (CPP) benefits.
This article explores how these changes are shaping the modern retirement journey, the financial advantages of delaying benefits, and how to build a strategy that matches your personal and economic reality.
Flexible Retirement: A New Era for OAS and CPP Collection
The New Age For Collecting OAS and CPP isn’t a single number anymore—it’s a flexible range. Canadians can now choose when to start their benefits based on factors like health, career plans, and financial needs.
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The government has introduced incentives for those who delay collecting CPP or OAS until age 70. By waiting, retirees can unlock significantly higher monthly payments—up to 42% more for CPP and 36% more for OAS compared to taking benefits at 65.
This system reflects modern realities. Canadians are not only living longer but also working longer. A flexible retirement age allows individuals to shape their income strategy in line with their unique life circumstances.
What the Numbers Say: Early vs. Delayed Retirement Benefits
Let’s break down how timing affects your pension income:
| Pension Plan | Start Age | Benefit Adjustment |
|---|---|---|
| CPP | 60 | 36% reduction |
| CPP | 65 | Standard benefit |
| CPP | 70 | 42% increase |
| OAS | 65 | Standard benefit |
| OAS | 70 | 36% increase |
Claiming CPP at 60 reduces benefits by 0.6% per month, or 36% over five years. Meanwhile, delaying to 70 earns a 0.7% monthly increase, or 42% more each month.
OAS offers a similar incentive. Starting at 70 instead of 65 increases payments by 36%. For those who don’t immediately need the income, delaying can yield long-term financial advantages, especially as retirement spans grow longer.
Why the Traditional Retirement Age No Longer Fits
With life expectancy now in the late 80s, a Canadian retiree could be looking at a 25–30 year retirement. That’s a long period to fund, especially amid rising inflation, unpredictable markets, and increased healthcare needs.
The changing nature of work has also shifted expectations. Gig work, freelance careers, and remote jobs have blurred the lines of traditional retirement. These economic and demographic realities are prompting Canadians to rethink when and how they stop working.
Recognizing this, the government has updated CPP and OAS policies to offer more flexibility and choice. Rather than forcing retirement at 65, the system now supports a phased approach.
Canada Follows a Global Trend Toward Later Retirement
While Canada has yet to raise its official retirement age, international trends suggest it may be coming.
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In 2016, Canada proposed increasing the OAS eligibility age from 65 to 67—but later reversed the decision. Still, the pressures of an aging population and rising pension costs continue to stir discussion.
Countries like the U.S., U.K., and Australia have already taken steps to gradually raise retirement ages. Canada may soon follow suit, though current policies prioritize voluntary delay with added benefits rather than mandatory age increases.
Canadians Are Working Longer—And That’s Changing Retirement
Data shows the number of Canadians over 65 who are still working has doubled in the last two decades. For some, it’s financial necessity. For others, it’s about maintaining structure, social engagement, or a sense of purpose.
With increased OAS and CPP benefits available to those who delay collection, continuing to work also makes financial sense. Retirement is becoming less of a cliff and more of a gradual descent, allowing individuals to transition on their own terms.
Strategic Retirement Planning: What You Need to Do Now
The key to thriving in this flexible retirement era is proactive planning. That means understanding benefit options and tailoring your decisions based on personal needs.
Here are some critical steps:
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- Learn the pension structure: Know the pros and cons of retiring early vs. waiting.
- Estimate long-term expenses: Factor in housing, healthcare, and inflation.
- Plan for phased retirement: Consider part-time work as a soft landing into retirement.
- Adjust your financial plan regularly: Stay agile to changing laws or life events.
- Monitor government updates: Future changes to eligibility rules are possible—stay ahead.
Retirement no longer comes with a set script. Building a flexible, dynamic strategy is the best way to secure a stable income throughout your later years.
FAQs About OAS and CPP Retirement Changes
Q1. Can I still retire at 65 in Canada?
Yes. You can still begin collecting full CPP and OAS benefits at 65. But waiting up to 70 could significantly increase your monthly payments.
Q2. Will the government raise the retirement age in the future?
There are no official announcements yet, but economic trends suggest it’s possible in the future.
Q3. Is it better to take CPP at 60 or 70?
Taking CPP at 60 gives early access but reduces your monthly payment. Waiting until 70 maximizes your income. Your decision should be based on health, longevity, and financial stability.
Q4. Can I still work while receiving OAS or CPP?
Yes, you can work and collect benefits. Your income may affect your taxes but won’t disqualify you from receiving CPP or OAS.
Q5. How do I choose the best retirement age?
Evaluate your savings, health, career plans, and desired lifestyle. Tools like retirement calculators and consultations with financial advisors can help.
