11: Old Age Security Basics

Old Age Security is the closest thing to a universal basic income we have in Canada. It, along with the Guaranteed Income Supplement, the Allowance, and the Allowance for the Survivor, is meant to provide a minimum guaranteed income that keeps seniors out of poverty.

Whether it actually does that is another episode for another day (the short answer is not really, and the proof on Canada’s worsening poverty is in the resources section of this episode).

Today, though, we’re talking about the basics of Old Age Security itself, and for most of this episode, I’ll use the acronym OAS so that I can use my five minutes for more important words.

Why is this important?

You don’t contribute to OAS directly. Instead, it’s paid for from general tax revenue, and how much you get depends on how long you’ve lived in Canada and how much net income you have from other sources. Too much net income and your OAS benefit starts getting smaller…but we’ll get to that in a minute.

For some people, OAS is a small slice of their retirement income pie. For lots of people, OAS, the Guaranteed Income Supplement, and maybe some Canada Pension Plan payments are the only income they have once they stop working.

You can be forgiven for not thinking much (if at all) about OAS until you start thinking (or worrying) about retirement. Take five minutes to get a little familiar, and bookmark this episode to come back to when it’s time to get serious about it.

How much do you get from Old Age Security?

You get to decide when you start getting OAS. It can be as early as age 65 or as late as age 70. For every month past your 65th birthday you wait, your benefit increases by 0.6% until you start receiving it.

Your benefit is based on how long you’ve been a resident of Canada between the ages of 18 and 65. It takes 40 years of residency to get the full OAS benefit, and your payment amount is decreased by 2.5% (or one fortieth) for every full year you didn’t live in Canada. If you were a resident of a country that has a tax treaty with Canada, your years of eligibility in that country might count towards your years here.

In October of 2025, the most anyone can get from OAS if they start receiving it at age 65 is $740.09 per month. This amount is adjusted every three months, in January, April, July, and October, in line with how much the cost of living increased the previous year. Once you turn 75, your benefit is also increased by 10%.

Unlike the Canada Pension Plan, OAS doesn’t pay anything to your surviving partner when you die. It just ends.

What about people with really low income?

Like I said at the top of this episode, OAS has a couple of friends that can show up when you start receiving your payments and you have low income, and they are the Guaranteed Income Supplement, the Allowance, and, occasionally, the Allowance for the Survivor.

What “low income” means depends on if you have a spouse and how old they are, or if they'res till alive, so it’s a bit of a moving target, and deserves a whole episode for itself - so watch for that coming soon.

What’s this clawback business all about?

OAS is at its heart an anti-poverty benefit, although from the time modern OAS started in 1965 until 1989, it was paid out to everyone, no matter what their income.

Since then, the OAS recovery tax has acted to reduce the amount of OAS for people whose income is high enough that it isn’t needed. You all know it as a clawback, but if you ever need to look the information up in official documents, remember to search for “recovery tax” instead.

To understand how the clawback works, you have to remember that the “benefit year” for any payment from the government that depends on how much income you received runs over two years, from July to June, and is based on the previous year’s net income (that’s line 23600 on your tax return). So if you’re receiving OAS from January to June in 2025, it’s based on your net income from 2023, and your July to December OAS is based on your net income from 2024.

If your net income in 2024 was more than $90,997, your OAS from July through December of 2025 will be clawed back. If your net income in 2025 is more than $93,454, you’ll start to see the clawback in July of 2026.

The clawback is 15% of the amount above the threshold. So if your net income for 2025 is $1,000 more than the $93,454 threshold, your OAS benefit will be reduced by $12.50 starting in July of 2025.

Getting Old Age Security

Most people get a letter from Service Canada around their 64th birthday telling them that they’ll start receiving OAS when they turn 65. If that’s what you want, and if the information on your letter is correct, you don’t have to do anything; Service Canada will just start sending you your money the month after your 65th birthday.

If you don’t want to start getting your OAS at age 65, or if you’ve turned 64 and didn’t get a letter, log into your Service Canada account, call them, or go into one of their offices (information about how to do this is in the resources for episode 2, and I’ll link to it from this episode as well).

Why is this important?

For some people–around 8% of seniors–Old Age Security is a bit of money they can get if they plan their generous retirement income well enough to avoid the clawback.

For lots of people–as in, about 35% of seniors as of the last good data I could find–OAS is a critical piece of their retirement income pie, along with its friends the Guaranteed Income Supplement and the Allowance.

For most people–as in, over 95% of seniors–OAS is an important piece of their retirement income pie, alongside the Canada Pension Plan and their own savings.

Chances are you are or will be one of the 95% of seniors getting OAS. Even if you don’t need to understand all the details right this second, knowing that it exists and roughly how it works will be relevant…someday!