CPP and OAS: How Much Will I Get?

The most expensive retirement mistake most Canadians make has nothing to do with poor investments or excessive spending. It happens when they make a single decision without proper analysis—a decision that permanently reduces their lifetime retirement income by $50,000, $100,000, or more. That decision is when to start collecting Canada Pension Plan (CPP) and Old Age Security (OAS) benefits.

For an average Canadian retiree, the difference between optimal and suboptimal benefit timing exceeds $75,000 in lifetime income. For someone with maximum CPP entitlement, the difference easily reaches six figures. Yet most Canadians spend more time researching which television to buy than analyzing when to start their government retirement benefits.

This guide explains how CPP and OAS benefits work, what affects your payment amounts, and how to use our calculator to determine your optimal claiming strategy based on your specific circumstances.

The Misconception That Costs Retirees Thousands

Most Canadians believe they should take CPP as soon as possible at age 60 because "you never know how long you'll live, and a bird in the hand is worth two in the bush." This intuition feels compelling—you've contributed your entire working life, so why not start collecting immediately?

The critical insight this reasoning misses: CPP and OAS aren't simple bank accounts where you withdraw your contributions. They're actuarially designed pension programs with remarkably generous adjustments for early and delayed claiming that fundamentally change the mathematics of optimal timing.

The real decision isn't "early money versus late money." It's smaller monthly payments for more years versus substantially larger monthly payments for fewer years. Once you understand the actual adjustment factors—which are significantly more advantageous for delayed claiming than most people realize—the optimal strategy becomes far less obvious than conventional wisdom suggests.

How CPP Payment Amounts Work

CPP can be started anywhere between age 60 and age 70. The benefit adjustments work as follows:

Starting early reduces your benefit by 0.6% for each month before age 65. Someone starting at age 60 receives a 36% permanent reduction. If your age-65 entitlement is $1,200 monthly, starting at 60 gives you just $768 monthly instead.

Starting at age 65 provides 100% of your calculated benefit based on your contribution history, which you can find on your CPP Statement of Contributions through your My Service Canada Account.

Delaying increases your benefit by 0.7% for each month after age 65, up to age 70. Waiting until 70 provides a 42% permanent increase. That same $1,200 monthly benefit becomes $1,704 at age 70.

Consider the dramatic range: someone who waits until 70 receives more than double the monthly payment compared to someone who starts at 60, despite having identical contribution histories. For reference, the average CPP benefit in 2025 is $845 monthly at age 65, while the maximum is $1,433 monthly.

The government designs these adjustments to be approximately "actuarially neutral" at average population life expectancy. In theory, the average Canadian should receive similar total lifetime benefits regardless of when they start—smaller payments for more years should roughly equal larger payments for fewer years.

However, what's neutral for the "average" Canadian isn't neutral for your specific situation. Your personal longevity expectations, tax situation, retirement income needs, and household coordination opportunities all affect whether early or delayed claiming makes more sense for you individually.

A Note About Quebec Pension Plan (QPP)

If you work in Quebec, you contribute to the Quebec Pension Plan rather than CPP. While QPP and CPP are separate programs administered independently, they function similarly for benefit timing purposes, with one significant advantage for Quebec residents.

QPP uses the same early claiming rules as CPP. You can start QPP benefits as early as age 60 with a 36% reduction, using the same 0.6% reduction per month before age 65. Maximum QPP benefits in 2025 are essentially equivalent to CPP maximums.

However, QPP offers more generous deferral options than CPP. While CPP can only be delayed until age 70, QPP can be deferred until age 72. From age 65 to 70, QPP increases by 0.7% per month (identical to CPP), providing a 42% increase by age 70. The additional deferral from age 70 to 72 provides another 16.8% increase (0.7% per month for 24 months), bringing the total increase to 58.8% compared to age 65. This means a Quebec resident entitled to $1,200 monthly at age 65 would receive $1,906 monthly by waiting until age 72, compared to the $1,704 maximum available to CPP recipients who can only delay to age 70.

This extended deferral option gives Quebec residents with strong longevity expectations and no immediate income need a strategic advantage not available to other Canadians. The breakeven age for deferring to 72 versus 70 occurs around age 83 to 84, making it attractive for those planning for longevity past age 85.

QPP is managed by Retraite Québec rather than Service Canada, contribution rates may differ slightly in any given year, and the calculation of your benefit uses your Quebec earnings history. If you worked in both Quebec and other provinces during your career, your benefits are coordinated between the two plans to ensure you receive the appropriate total amount.

For QPP timing decisions, the strategic principles discussed in this guide apply equally. The calculator can be used with your QPP entitlement amounts through age 70, though it does not currently model the additional deferral to age 72 available for QPP. Tax considerations, survivor benefit strategies, and household coordination approaches remain identical. Simply substitute your QPP benefit amount from your Retraite Québec statement wherever this guide references CPP amounts.

How OAS Payment Amounts Work

Old Age Security operates differently from CPP in several important ways. Unlike CPP, which requires contributions, OAS requires only Canadian residence—specifically 40 years of residence after age 18 for full OAS, with partial benefits available with as little as 10 years of residence (20 years if living abroad when you apply).

OAS normally begins at age 65, but you can voluntarily defer up to age 70. For each month you delay after age 65, your benefit increases by 0.6%, providing a 36% increase if you defer the full five years to age 70. Additionally, OAS automatically increases by 10% at age 75 regardless of when you started receiving benefits.

For someone entitled to full OAS of $735 monthly in 2025, starting at age 65 provides $735 initially, stepping up to $809 at age 75. Deferring to age 70 provides $1,000 initially, stepping up to $1,100 at age 75.

Two critical OAS considerations affect timing decisions. First, the OAS clawback (recovery tax) begins at $90,997 in net income for 2025, with benefits completely eliminated around $148,000. High-income retirees should consider deferring OAS to years when their income is lower, potentially avoiding clawback entirely while also earning deferral credits.

Second, Guaranteed Income Supplement (GIS) is only available after you start OAS and typically provides greater total benefits than deferral credits for low-income seniors. If you'll qualify for GIS, you should generally not defer OAS.

The Breakeven Question: When Does Delaying Pay Off?

Everyone wants to know the breakeven age—the point where cumulative benefits from delaying equal cumulative benefits from starting early. Live beyond the breakeven age, and delayed claiming provides more total lifetime income. Die before it, and early claiming would have been better.

For someone comparing CPP at age 60 versus age 65, the breakeven occurs around age 74. Comparing age 65 versus age 70 for CPP, the breakeven is approximately age 81. For OAS deferral from 65 to 70, with its smaller deferral credits, the breakeven age is approximately 82 to 83.

These breakeven ages provide a foundation for decision-making, but simplified breakeven analyses miss several financially significant factors that materially affect real-world outcomes.

What Simple Breakeven Calculations Miss

Most breakeven analyses stop at "live to age X and strategy Y wins." This overlooks several crucial considerations that should inform your decision.

Purchasing power matters because CPP and OAS are fully indexed to the Consumer Price Index. Your benefits automatically increase every year to match inflation. This inflation protection becomes increasingly valuable the longer you live, yet most breakeven analyses treat indexed and non-indexed dollars as equivalent. A private inflation-indexed annuity with similar characteristics would cost 30% to 50% more than a non-indexed annuity.

Taxation significantly affects the real value of benefits. Benefits received in your 60s while you're still working or have other substantial income may be taxed at 35% to 45% marginal rates. Benefits received in your 70s after other income sources have declined might face only 22% to 25% marginal rates. After accounting for taxes, the real breakeven age can shift by two to three years depending on your income trajectory.

Investment alternatives theoretically advantage early claiming if you invest the difference rather than spending it, achieve reasonable after-tax returns, and maintain this discipline over decades. Most retirees don't satisfy all three conditions. Additionally, CPP and OAS provide inflation protection and longevity insurance that's virtually impossible to replicate through private investing at comparable cost.

Longevity uncertainty is perhaps the most important factor. You don't know wh...