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Retirement Planning Tools: Old Age Security (OAS), RRSP’s & Pension Plans

The Old Age Security (“OAS”) benefit is the principal component of Canada’s public retirement social security system. The OAS program provides a base income which allows individuals to supplement their income from other sources including: 

  • Canada Pension Plan (“CPP”) / Old Age Pension (OAP)
  • Private Pension Plans
  • Registered Retirement Savings Plans (“RRSP”)
  • Tax Free Savings Accounts (“TFSA”)
  • Personal Investments.

The OAS program provides a basic level of income to seniors aged 65 and over who meet the legal and residence requirements.  An individual’s OAS benefit is calculated by the length of time a person has lived in Canada after the age of 18 and is considered taxable income.

Qualifying for OAS

To qualify for the full OAS benefit an individual must have lived in Canada for at least 40 years after the age of 18. For individuals with less than 40 years residency, a reduced benefit is calculated at 1/40th of the full benefit for each year the individual resided in Canada after the age of 18.  

The current maximum Old Age Security benefit (as of October 2021) for an individual is $635.27, with benefits being adjusted quarterly in January, April, July, and October every year to account for changes in the Cost of Living (Inflation). 

When to Apply for OAS

An individual should apply for the OAS benefit the month after their 64th birthday.  

This will allow the Canada Revenue Agency (“CRA”) time to calculate the OAS benefit an individual will qualify for when they turn 65. OAS payments are paid in monthly installments, on the third business day prior to the end of the month.

As of July 2013, an individual can defer their OAS benefits for up to 5 years after the date in which they become eligible. The deferral provides for a higher monthly benefit, estimated to be as much as 36% higher if an individual delays receiving their OAS until age 70.

Is OAS Income Enough to Support?

Since the Old Age Pensions Act in 1927, Canadians have relied upon OAS to provide a basic retirement income when they reach the age of 65, however OAS and CPP alone will not adequately support an individual’s retirement.  Individuals preparing for retirement should assess other retirement income sources such as Private Pension Plan, RRSPs, and TFSAs to ensure a comfortable retirement.

Additionally, all retirement planning requires addressing any outstanding debts such as loans, credit cards, and mortgages.  

Retirement Planning

Retiring with debt was never a big deal because it was always assumed that you had to pay off all of your loans, etc. before you retired, but that is no longer the case. Reducing debt load should be an individual’s top priority in their retirement planning. Carrying debt into retirement is not advisable due to the typical decrease in monthly income experienced by individuals, which may no longer cover both the cost of living and future debt repayments.  

The following statistics demonstrate how common individuals retire with debt:

  • 66% of Retirees have average credit card debt of $11,000
  • 20% of Retirees carry an outstanding mortgage on their residence
  • 20% of Retirees have a car payment

However, if a retirement savings plan is properly prepared for with supplemental retirement income (Pensions, RRSPs, TFSAs, etc.) some retirees may not experience financial stress. It is recommended that an individual should meet with a financial planner to help determine the pros and cons of carrying a mortgage and other debt based on their financial resources relative to how they plan to spend their retirement years.

In this podcast, our Licensed Insolvency Trustee, Matt Fader talks about assessing what you want your retirement to look like and what you need to do to get there.

We hope this information helps you or your loved ones plan for retirement, but we also recognize that sometimes some extra help or advice might be needed. If your looming debts and retirement feel overwhelming, Allan Marshall & Associates Inc. is always available to confidentially discuss any matters dealing with your credit and debt.  

Don’t hesitate to call us at 1-888-371-8900 to schedule a free consultation.


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Allan Marshall & Associates Inc.

Allan Marshall & Associates Inc. is a Licensed Insolvency Trustee firm in British Columbia, Alberta & the Maritimes. Our dedicated writing team consists of LIT's, counsellors, and debt administrators that help to write informative articles and answer questions about your debt issues.

We are licensed by the Federal Government of Canada to administer Personal Bankruptcies, Consumer Proposals, other insolvency services such as Credit Counselling. We have the knowledge and experience to assess your situation and offer the best advice for your particular need, whether you are a first time bankrupt or simply struggling to make ends meet.