The two biggest government pension plans — the Canada Pension Plan (CPP) and Old Age Security (OAS) — let you choose when you start collecting. But the timing matters: the earlier you start, the less you receive each month. If you need income right away or have health concerns, starting early can make sense. If you can afford to wait, deferring your pensions means higher payments that can add up to more over your lifetime.
When to take CPP
You can start collecting CPP as early as age 60 or as late as age 70, though the standard age is 65. If you start early, your payout decreases by 0.6% for every month before your 65th birthday you start collecting. Taking that first cheque at 60 means a 36% reduction in your income. Start late, however, and you're rewarded with an increase of 0.7% per month — up to 42% more if you hold out until 70.
What's right for you comes down to how long you live — and that's hard to predict.
Many people use what is called a "breakeven age": how long you have to live to make those years of not getting paid worth it.
How long you think you’ll live | When it may be beneficial to start taking your CPP payments |
|---|---|
| <74 | 60 |
| 74 - 82 | 65 |
| >82 | 70 |
Generally speaking, if you can do without CPP in those early retirement years, it's often a good idea to consider deferring for as long as you can. That mitigates the risk of living a lot longer than you expect to (a good problem to have). The longer the money stays in the plan, the longer the onus is on the CPPIB to make it grow. Once you start taking payments, that burden shifts to you.
How deferring CPP affects your payments
If you can afford to wait past 65, deferring your CPP payments can increase your monthly income by up to 42%. For every month you delay past 65, your payment grows by 0.7% — that's 8.4% per year.
If your CPP payment at 65 would be $1,000 per month, deferring to 70 would increase it to roughly $1,420 per month — for life. That extra $420 per month adds up quickly, especially if you live well into your 80s or beyond.
There's no additional benefit to waiting past 70. Your payments max out at the 42% increase, so there's no reason to delay beyond your 70th birthday.
Factors that affect when you should take CPP
The right time to take CPP depends on your specific circumstances. Here are the key factors to weigh:
Your health and life expectancy — If you have health concerns or a family history of shorter lifespans, taking CPP earlier may make more sense. If you're in good health, deferring often pays off.
Other sources of retirement income — If you have a workplace pension, RRSP savings, or other investments that can cover your expenses, you may be able to defer CPP and benefit from higher payments later.
Your tax situation — CPP payments are taxable income. If you're still working, adding CPP on top could push you into a higher tax bracket. Waiting until your income drops in full retirement can mean keeping more of your benefit.
Your spouse or partner's situation — If your partner has a strong pension or is still working, you may have more flexibility to defer. Consider your household income as a whole.
Whether you need the money now — If you've stopped working and need income to cover essential expenses, taking CPP early — even at a reduced rate — is a reasonable choice.
Once you start receiving CPP, you can't change the amount. It's worth taking time to think through these factors before you apply.
Working while collecting CPP
You can collect CPP and continue working at the same time. If you're under 65 and receiving CPP, you and your employer must continue making CPP contributions. These additional contributions increase your retirement pension through the CPP post-retirement benefit.
If you're between 65 and 70 and still working, contributing to CPP is optional. Continuing to contribute means you'll receive additional post-retirement benefit payments on top of your regular CPP.
After 70, CPP contributions stop regardless of whether you're working.
When to take OAS
Unlike CPP, OAS doesn't have an early option. But if you defer your payments after your 65th birthday, you get the same 0.6% per month bump-up — up to 36% more at age 70. Regardless of when you start, the Service Canada adds another 10% to your payout when you turn 75.
The calculation here is the same as with CPP. If you can wait, it often benefits you to do so. If you think you'll make it to your 80s, waiting often earns you more overall income. But there is no shame in taking the money early.
How OAS clawback affects your decision
OAS includes an income-based clawback called the OAS recovery tax. If your net income exceeds a certain threshold — $95,323 for the 2026 tax year tax year — you'll have to repay part or all of your OAS benefits. If your income exceeds roughly $154,753 (ages 65–74) or $160,696 (75 and over), your OAS is fully clawed back.
This is where deferral can help. If you're still earning a high income at 65, starting OAS right away means some or all of it could be clawed back. Deferring until your income drops means you keep more of your OAS payments and receive a higher monthly amount thanks to the deferral increase.
If you expect your income to remain above the clawback threshold for several years past 65, deferring OAS is often worth considering.
How to decide the right time for you
There's no single answer to when you should start CPP and OAS — it depends on your health, income, and retirement plans. Here are a few general guidelines:
If you need income now and have no other sources — taking CPP and OAS as soon as you're eligible is a practical choice.
If you can afford to wait — deferring both CPP and OAS often results in higher lifetime income, especially if you live past your early 80s.
If you're still working at 65 — consider deferring to avoid a larger tax bill and potential OAS clawback.
A financial advisor can help you model different scenarios based on your specific situation. The important thing is to make a deliberate choice rather than defaulting to age 65.
