Service Canada Raises Q3 Old Age Security 1.2%, Lifting Maximum to C$827.17

Q: Delaying OAS offers a 36% bonus, but when does this financial gamble not pay off?

Delaying OAS usually does not pay off if you are low-income, need the money at 65, expect a shorter lifespan, or will still face heavy clawbacks after 70. The biggest exception is for seniors eligible for the Guaranteed Income Supplement. GIS is only paid once OAS starts, so deferring OAS also means giving up GIS during those years. Because GIS does not earn any deferral bonus, the lost payments are often far larger than the future 36% OAS increase. In practice, that can push the breakeven age past 100. For most others, the math works only if you live long enough. Deferring from 65 to 70 raises OAS by 0.6% a month, or 36% at 70, but you give up five years of payments. The usual breakeven point is around age 82 to 84. If health problems or family history suggest you may not live well beyond that, taking OAS earlier is often the better choice. Cash-flow matters too. If you need OAS to cover basic expenses, deferral is hard to justify unless you have other savings to bridge the gap. Using taxable RRSP or RRIF withdrawals to replace OAS can also reduce the benefit of waiting by creating extra tax drag. High-income seniors need a different calculation. Deferral can help if income is high at 65 and lower later, because it avoids wasting benefits during clawback years. But if income after 70 will still be high enough for the OAS recovery tax to sharply reduce or fully eliminate payments, the value of waiting falls.

Q: Could your RRSP withdrawals accidentally cancel out your entire Old Age Security pension?

Yes. RRSP withdrawals can reduce your Old Age Security and, if they are large enough, wipe it out entirely. The reason is the OAS recovery tax, or clawback. OAS is taxable, and the government reduces it when your net income rises above a set threshold. For the July 2026 to June 2027 payment year, based on 2025 income, the clawback starts at $93,454. OAS is reduced by 15 cents for every dollar of net income above that level. That means RRSP withdrawals matter because they count fully as taxable income, just like RRIF withdrawals, CPP, workplace pensions, rental income, taxable capital gains and grossed-up dividends. If those income sources together push you high enough, your OAS can disappear. For 2025 income, OAS is fully clawed back at $152,062 for people aged 65 to 74 and $157,923 for those 75 and older. This often happens “accidentally” when retirees leave large RRSP balances untouched for too long and then face bigger mandatory RRIF withdrawals later. Those forced withdrawals can stack on top of CPP and other income and trigger a much larger clawback than expected. The main planning tools are to spread RRSP withdrawals over more years, use TFSA withdrawals where possible because they do not count toward OAS income, split eligible pension income with a spouse, and avoid one-time income spikes such as large capital gains. For many retirees, drawing down RRSPs earlier can help preserve more OAS later.

1 articles · Updated · MTL Blog · Jul 13

July payments are the first to reflect Service Canada's third-quarter Old Age Security increase, with maximum monthly benefits rising to C$751.97 for ages 65-74 and C$827.17 for seniors 75 and older.
The 1.2% quarterly bump, up 2.3% from a year earlier, follows Service Canada's CPI-linked reset schedule, which updates OAS rates every January, April, July and October.
Guaranteed Income Supplement and related benefits also increased through September, with maximums reaching C$1,123.17 for single recipients, C$1,428.06 for the Allowance and C$1,702.34 for the Allowance for the Survivor.
Eligibility still depends on age, residency and income rather than work history: seniors must be 65 or older, have lived in Canada at least 10 years after age 18, and stay below 2025 income thresholds.
July's OAS deposit is scheduled for Wednesday, July 29, while seniors who delay starting benefits can raise their payment by 0.6% a month up to age 70.