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Canada’s Real Retirement Age Is 67-68: What It Means for Your CPP and OAS
The key impact: If you are planning to retire at 65, you might need to rethink your timeline. New data shows that most Canadians are actually retiring at age 67 or 68. This is not by choice for many—it is a financial necessity.
While the official retirement age in Canada is 65, the reality is that life expectancy has jumped to 82 years (up from 72 in 1965). Many seniors simply do not have enough savings to cover a 17-year retirement. As a result, the number of people aged 65 to 69 who are still working has doubled over the past 25 years, now sitting at 30%.
This shift has a direct impact on your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits. If you delay taking these benefits past age 65, your monthly payments increase significantly.
How Delaying CPP and OAS Boosts Your Income
The math is simple: the longer you wait, the more you get.
- CPP: Your benefit increases by 8.4% for every year you delay after age 65, up to age 70.
- OAS: Your benefit increases by 7.2% for every year you delay after age 65, up to age 70.
Example: If you delay both CPP and OAS from age 65 to age 70, your combined monthly income from these programs could be roughly 40% to 50% higher than if you started at 65.
However, this strategy only works if you have other income or savings to live on during those five years.
Who Is Affected
This news affects almost every Canadian, but especially:
- Canadians aged 50 to 64: You are in the critical planning window. You need to decide whether you can afford to stop working at 65 or if you should plan to work until 67 or 68.
- Canadians approaching 65: You have a specific choice to make. You can take CPP and OAS immediately at a lower rate, or defer them for a higher rate later.
- Younger Canadians (under 40): You have time to adjust. You should assume you will work until at least age 67 and save accordingly.
- Self-employed workers: You do not have a company pension. You are most likely to feel the financial pressure to keep working.
What You Should Do
Do not wait until you are 64 to figure this out. Take these steps now:
- Check your CPP Statement of Contributions. Log into your My Service Canada Account to see your estimated benefits at age 60, 65, and 70.
- Use an online calculator. Compare the total lifetime income you would receive if you start CPP and OAS at 65 versus 67 versus 70.
- Review your savings. If your RRSP and TFSA balances are low, you may need to plan on working longer.
- Increase contributions now. If you are under 50, boost your RRSP and TFSA contributions. Even small increases now compound significantly over time.
- Consider your health. If you have a physically demanding job or health issues, delaying retirement may not be realistic. Factor this into your plan.
Bottom Line
The era of retiring comfortably at 65 is over for many Canadians. The real retirement age is now 67 or 68. Delaying your CPP and OAS benefits can give you a much larger monthly income, but it requires you to keep working or have other savings to bridge the gap. The best time to adjust your plan is today.
Source: The Globe and Mail