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Eventually, the time comes for all Canadians when they reach the age to tap into their pensions. Having financial security in your older years is something that weighs all the minds of many.
Canada offers two financial programs funded by federal taxes for seniors who meet certain eligibility requirements. They are known as Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). They are an important income supplement in addition to retirement and private investments.
Our guide will go over what the Guaranteed Income Supplement is, how it works and how to confirm if you are eligible. Finally, it will let you know how to make sure you are also investing to secure your financial future so you can securely enjoy your retirement.
What is the Guaranteed Income Supplement?
The Guaranteed Income Supplement (GIS) is a monthly “top-up” benefit available to any low-income seniors receiving, or eligible to receive the Old Age Security (OAS) pension. You are eligible if your annual income (or combined annual income for couples) is below the maximum annual threshold. The Guaranteed Income Supplement is not taxable.
This means that if your income - which could be from a variety of sources such as employment or investment income - is higher than a certain threshold, you may not be eligible to receive this GIS benefit. It is something to help out seniors making a low income cover basic expenses such as food, housing and medications.
In many cases, you will be notified in writing regarding when you could start receiving the first payment. They will send you this letter the month after you turn 64. In other cases, you may have to apply and go through the application process.
Old Age Security and the Guaranteed Income Supplement are funded through federal taxes and they are largely open to all people who meet the age requirements. This is different from the Canada Pension Plan is funded through contributions made during employment. This means that only workers who made valid contributions to the pension scheme and have reached the age of 60 are likely to receive it.
GIS and OAS are a solid foundation for your retirement planning, but they aren't everything. Learn how to get the most out of your monthly income by speaking with a financial advisor today.
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Who is eligible for Guaranteed Income Supplement?
You can be eligible for the Guaranteed Income Supplement if:
- you are 65 or older
- you live in Canada
- you get the Old Age Security (OAS) pension
- your income is below the maximum annual income threshold for the GIS-based on your marital status.
Your eligibility will rely heavily on your income and marital status.
For example, your income must be below $19,464 if you’re single, widowed, or divorced.
If you have a spouse or common-law partner, your combined income must be below:
|If your partner:||Combined income must be below:|
|Receives the full Old Age Security Pension||$25,728|
|Does not receive an Old Age Security Pension||$46, 656|
|Receives the Allowance||$46,656|
Sources of income that are recognized to be eligible for GIS are:
- CPP or Quebec Pension Plan (QPP) benefits
- Other pension income (i.e. private pensions, superannuation, and foreign pension income)
- Registered Retirement Savings Plans (RRSPs) that you cashed out during the year
- Employment Insurance (EI) benefits
- Interest and other investment income
- Capital gains and taxable Canadian dividends
- Net income from any rental properties
- Net employment or self-employment income
- Other income from sources (i.e. workers' compensation payments and alimony)
While the amount of GIS will depend on your circumstances, the maximum monthly allowance benefit in 2022 is $1,219.68.
If any of the above situations relate to you, you are likely eligible to apply for the Guaranteed Income Supplement benefit.
How do I apply for the Guaranteed Income Supplement?
You must apply for the Guaranteed Income Supplement (GIS). You can do so at the same time that you apply for OAS with the ISP-3550 form.
When you go to apply for GIS, you will need to provide specific documentation. The type of documents you are required to provide will depend on your marital status, the type of application you are making, and whether you are applying for the first time. The application kit will list the documents, if any, you need to provide. If you are married, you may be asked to provide a marriage certificate. If you are living with a common-law partner (same-sex or opposite-sex) you may be asked to complete and sign a "statutory declaration" and provide other supporting documentation.
You re-qualify for GIS by filing your income tax return annually, by the deadline (April 30) meaning you only need to apply for the benefit once as long as you continue as long as you file an income tax each year.
Apply for GIS online
To apply for GIS online, you must be at least one month past your 64th birthday. You may do so through your My Service Canada Account (MSCA). If you do not already have one, you will need to register for one.
Apply for GIS by mail
It is easy to apply for GIS offline too. Just print and complete the Application for the Guaranteed Income Supplement or Statement of Income (ISP-3025). Include certified true copies of the required documents.
Mail the application to a Service Canada office. You may also bring it in in person.
You may also call 1-800-277-9914 to request a GIS application form.
GIS Payment Dates
Once you have applied and been accepted for GIS, you can expect to receive your payments on the following dates in 2022. Both OAS and GIS payments are paid on the same date.
- January 27, 2022
- February 24, 2022
- March 29, 2022
- April 27, 2022
- May 27, 2022
- June 28, 2022
- July 27, 2022
- August 29, 2022
- September 27, 2022
- October 27, 2022
- November 28, 2022
- December 21, 2022
Are Guaranteed Income Supplement and Old Age Security enough to retire on?
The maximum monthly Guaranteed Income Supplement allowance benefit you can receive in 2022 is $1,219.68 and the maximum Old Age Security payment you can receive is $642.25. So if you are receiving the maximum of each benefit, you may be wondering if that is enough to live off.
Even if you receive the maximum of both benefits, it may not be enough to live on. For many people, this would represent a large reduction in their lifestyle. GIS and OAS are best thought of as a part of retirement planning, not the entirety of it.
Experts always recommend investing as early as possible so that you do not have to rely on government benefits to cover necessities in your older years when you are supposed to be enjoying life.
We will help break down some quick numbers when it comes to investing and retirement.
A basic rule of thumb is that you will need about 70% of your current income to maintain your current standard of living in retirement.
If you make $100,000 per year today, you should plan to have about $70,000 (in today’s dollars) per year in retirement. When you take inflation into account, that dollar amount will need to be higher once you retire.
Even if you have little to no debts such as mortgages or car payments that you pay when you retire, those savings are often partly offset by increased spending on other things, like golf or travel.
Using the example above, an individual at age 65 would receive about $16,140 per year using GIS and OAS which is well below the required $70,000 per year at retirement.
The Guaranteed Income Supplement and Old Age Security are helpful benefits but will leave most Canadians with a significant retirement income gap. If maintaining your current standard of living throughout retirement is important to you, government benefits alone will not help you meet your retirement goals. A retirement nest egg can get you the rest of the way.
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How do I contact Old Age Security?
If you need to contact OAS for application status or general inquiries, you can do so by:
- Visiting a Service Canada Centre
- By phone by calling toll free at 1-800-277-9914
Their hours of operation are Monday to Friday from 8:30 am to 4:30 pm local time.