For decades, Canadians planned their retirement around the traditional age of 65, when benefits like Old Age Security (OAS) and the Canada Pension Plan (CPP) typically began. However, in 2025, new rules and shifts in eligibility are changing the landscape. Retirement is no longer tied strictly to 65, and Canadians must now rethink how and when they choose to collect their government benefits.
What is OAS and CPP?
The Old Age Security (OAS) pension is a monthly payment funded through government revenues, available to most Canadians once they meet the residency requirements. The Canada Pension Plan (CPP), on the other hand, is a contributory program funded by workers and employers throughout a person’s career, providing retirement income based on contributions.
The Big Change in Retirement Age
Traditionally, 65 was considered the golden age to stop working and start collecting OAS and CPP. But under the new system, flexibility is emphasized. Canadians can now choose to take their benefits as early as 60 or as late as 70, with financial adjustments based on the timing. Retiring at 65 is no longer the default instead, it is one option within a broader framework.
How Timing Affects Your Payments
The government has adjusted benefit structures to encourage later retirement. Collecting CPP or OAS earlier reduces monthly payments, while delaying them increases lifetime income. The decision depends on personal health, career goals, and financial stability.
OAS & CPP Payment Adjustments by Age
| Age You Start Collecting | OAS Impact | CPP Impact |
|---|---|---|
| 60 | Not available | Reduced up to 36% |
| 65 | Standard rate | Standard rate |
| 67 | Slightly higher OAS | 16.8% higher CPP |
| 70 | Maximum OAS | 42% higher CPP |
(Percentages are approximate, based on current 2025 rules.)
Why the Government Encourages Later Retirement
With Canadians living longer and healthier lives, the government aims to keep the workforce active for more years while reducing strain on pension programs. By rewarding those who delay claiming CPP and OAS, the system ensures sustainability and incentivizes seniors to maximize their retirement income.
What It Means for Canadians Planning Retirement
The biggest takeaway is that retirement is no longer fixed at 65. Individuals now have the power to design a retirement plan that suits their lifestyle. For those with health issues or limited savings, collecting early might make sense. For others who can continue working, waiting until 70 could significantly boost their financial security.
Final Thoughts
The shift away from a fixed retirement age changes the way Canadians must approach financial planning. Instead of automatically stopping work at 65, retirees now face a strategic decision about when to claim OAS and CPP. Understanding the trade-offs between early access and delayed benefits will be crucial to securing a comfortable and sustainable retirement.