I am now 57 years old. As I am approaching retirement age I am beginning to take a second look at all the government programs that are available to me.
If I was going to turn 65, these are government benefits that would be available to me.
Quebec Pension Plan: $102. I have always been a free lancer and through the years, I haven’t contributed much to the the QPP, so as you can see, I am not getting much.
Old Age Security: $538.
Guarantee income supplement: $1,073
Total: $1,710
That’s not bad at all. In addition I will have my retirement money which should provide me with a bit more than $2,700/month. I think I am good. I will be able to spend about $4,400
I am so happy to be Canadian
Canada has a remarkable social safety net, with numerous programs designed to protect its citizens from falling into poverty. These services offer essential support and security, ensuring that all Canadians have access to the resources they need.
Some of the most valuable services provided by the government include welfare, the Canada Child Benefit, the Canada Pension Plan, unemployment benefits, universal health care, Workers’ Compensation, Employment Insurance, subsidized education, homeless shelters, Old Age Security, the Guaranteed Income Supplement, and more.
What is the Old Age Security
Old Age Security (OAS) is a government-provided pension program that doesn’t require any prior contributions. You can claim OAS even if you’ve never worked a day in your life, or if you’re still working when you reach the eligibility age.
To qualify for OAS you need to:
- Be at least 65 years old
- Be a Canadian citizen or legal resident
- Have lived at least 10 years in Canada.
Although you can start receiving OAS at age 65, some people choose to defer it until age 70. The advantage of deferring is that you’ll receive an additional 0.6% for each month that you delay claiming it.
If you’re uncertain about your life expectancy, it might be wise to start claiming OAS as soon as you’re eligible. However, if you expect to live a long and healthy life, deferring your OAS could be beneficial.
The program is available to citizens over 65 and people have to apply to get it. If you don’t apply, you don’t get it.
How Old Age Security Affects Your Taxes
OAS payments are taxable income. As of 2024, the basic monthly amount is $691.00, which is adjusted quarterly according to the Consumer Price Index.
The Old Age Security Clawback
It’s important to note that if your taxable income exceeds $86,912, your OAS will be reduced at a rate of 15% of your net income. It disappears entirely if you earn more than $142,466.
I’ve encountered people who are concerned about earning too much because they fear losing their OAS. I find this perspective puzzling. Someone earning $142,466 annually—equivalent to $11,872 per month—should be able to manage without the $691.00 from OAS.
For those intent on maximizing their OAS benefits, keeping taxable income below $142,466 is essential. Strategies include:
- Ceasing RRSP contributions once your RRSP reaches a certain level (e.g., $700,000—though this figure requires more precise calculations).
- Maximizing contributions to a Tax-Free Savings Account (TFSA), as withdrawals from a TFSA are tax-free and do not count as taxable income.
- Distributing wealth to your children after reaching a certain level of financial security.
I’m Happy If My Tax Dollars Support Old Age Security
The amount allocated to OAS is relatively small, and people over 65 often face limited employment opportunities and declining health. For a poor elderly person with few opportunities, $691.00 could be a lifeline. Personally, I’m glad my tax dollars contribute to helping those in need.
I have a few friends who receive Old Age Security payments and they couldn’t be more grateful. Old Age Security reflects Canada’s dedication to supporting its citizens, ensuring that seniors can live with dignity and financial stability in their later years. This program highlights the importance of compassion and security in our society, offering reassurance to all Canadians as they age.