OAS in Canada: How It Works, When to Take It, and How to Avoid the Clawback

OAS in Canada: What You Actually Need to Know

When it comes to retirement income in Canada, most people understand CPP… but OAS? That’s where things get confusing.

So let’s break it down in a way that actually makes sense, because how you handle your OAS can have a real impact on how much money you keep in retirement.

What is OAS?

Old Age Security (OAS) is a monthly payment from the Canadian government available starting at age 65.

Unlike CPP, it is not based on your work history.

Instead, it’s based on how long you’ve lived in Canada after age 18. To receive the full OAS pension, you generally need 40 years of residency.

And one important point:

You cannot take OAS early.

It does not start at age 60. The earliest you can begin is 65.

How Much is OAS in 2026?

For 2026, the maximum OAS payments are approximately:

• ~$713/month (ages 65–74)
• ~$784/month (age 75+)

These amounts are indexed to inflation and updated quarterly.

And yes, OAS is fully taxable income.

Should You Take OAS at 65 or Delay It?

You don’t have to take OAS at 65.

You can delay it up to age 70.

For every month you delay, your payment increases by 0.6%, which equals a 36% increase if you wait until age 70.

That’s a guaranteed, inflation-adjusted increase.

Sounds like a no-brainer, right?

Not so fast.

The OAS Clawback (Recovery Tax)

OAS is income-tested.

Once your income exceeds a certain threshold (around $90,000 in 2026, indexed annually), you start to pay it back.

Here’s how it works:

• You repay 15 cents for every $1 above the threshold
• At higher income levels (roughly ~$150,000+), your OAS can be fully clawed back

This is called the OAS Recovery Tax, but most people know it as the clawback.

Why Timing Your OAS Matters

This is where strategy becomes critical.

Because the goal isn’t just to get the biggest OAS payment.

It’s to keep the most money after tax.

For example:

• If you delay OAS to 70 but have high income later (from RRIF withdrawals, pensions, or business income), you may lose a large portion of it to clawback
• If you take OAS earlier while your income is lower, you may actually keep more

In other words:

A bigger cheque doesn’t always mean more money in your pocket.

Smart Planning Strategies

A good retirement plan looks at OAS in context, not in isolation.

That might include:

• Drawing down RRSPs earlier to reduce future taxable income
• Smoothing income across retirement years
• Coordinating CPP and OAS timing
• Planning around major events (like selling a property or retiring from a business)

The Bottom Line

There is no universal “best age” to take OAS.

The right decision depends on your income, your assets, your tax situation, and your overall retirement plan.

But one thing is clear:

If you don’t plan for OAS properly, you could end up giving a big portion of it back.

And that’s completely avoidable with the right strategy.