Eventually, the time comes for all Canadians when they reach the age to tap into their pensions. Having financial security in your retirement 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 the Canda Pension Plan and private investments.
Our guide will go over what Old Age Security is, how it works and how to check 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 Old Age Security (OAS)?
The Old Aged Security (OAS) program is funded by the general revenues of the Government of Canada. This means that no one pays into it directly unlike the Canada Pension Plan. You can receive its benefits even if you have not worked in Canada.
The OAS program includes:
- The OAS pension: A monthly benefit available to seniors aged 65 and older who meet the Canadian legal status and residence requirements.
- The Guaranteed Income Supplement: A monthly non-taxable benefit for OAS pension recipients who have a low income and are living in Canada.
- The Allowance: A monthly benefit available to low-income individuals aged 60 to 64 whose spouse or common-law partner receives the Guaranteed Income Supplement.
- The Allowance for the Survivor: A monthly benefit available to individuals aged 60 to 64 who have a low income, who are living in Canada, and whose spouse or common-law partner died.
In some cases, Service Canada will be able to automatically enroll you for the OAS pension. In other cases, you will have to apply for the Old Age Security pension. Service Canada will inform you if you have been automatically enrolled. Low-income OAS recipients may also be eligible for the Guaranteed Income Supplement. Together these programs are designed to help Canadian seniors cover basic daily expenses such as medications that they may not be able to afford on a limited income.
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 Old Age Security (OAS)?
If order to be eligible for the Old Age Security benefit, you must:
- be 65 years of age or older
- be a Canadian citizen or legal/permanent
- a resident of Canada (or landed immigrant) when your pension application is approved
- have lived in Canada for at least 10 years since the age of 18
If you are applying from outside the country, you must have:
- been a Canadian citizen or a legal resident when you left Canada
- have lived in Canada for at least 20 years since the age of 18
If you fit any of these requirements, you should be able to receive Old Age Security.
How do I apply for Old Age Security (OAS)?
You may receive a letter from Services Canada to let you know that you will receive the Old Age Security (OAS) pension.
You will need to apply for the Old Age Security pension if:
- you get a letter asking you to apply
- information in the letter you receive is incorrect
If you did not receive any letter about the Old Age Security pension the month after you turned 64, you will need to contact Services Canada to see if you need to apply.
You will then need to determine when you want to receive your Old Age Security. Your OAS pension can start as early as the month following your 65th birthday or the month after you meet the minimum residence and legal status requirements.
You can also choose to delay receiving your OAS pension payment up to the age of 70. By doing this, you would increase the amount of your benefit. For each month you wait to start your OAS pension, your pension amount will go up by 0.6 percent (7.2 percent per year or 36 percent over five years). For example, a full pension amount of $600.85 per month at age 65 would be $817.15 per month at age 70.
Once you have made your determination, you can submit your application. You can do so in a few different ways.
To apply online to do so you must:
- be at least 1 month past your 64th birthday
- not be currently receiving an Old Age Security pension
- have not already applied for the Old Age Security pension and Service Canada is not currently assessing your application
- be currently living inside of Canada
- not have an authorized third party on your account (for example, a person acting by proxy)
If you are applying online, you’ll need a My Service Canada Account (MSCA).
Apply by paper
- print and complete the paper form Application for the OAS and the GIS (ISP-3550)
- include certified true copies of the required documents
- mail the application or bring it in-person to a Service Canada office
Once your application is accepted, you can begin receiving your payments.
OAS Payment Dates
For 2022, your OAS pension benefit will pay into your bank account on:
- 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
The maximum monthly OAS payment you can receive in 2022 is $642.25.
This amount is revised every quarter in January, April, July, and October to account for increases in the cost of living.
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 is likely it will 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.
There are a few great ways to invest. If you like a hands-on approach an online brokerage or robo-advisor may be right for you. For other investors, we recommend working with a financial advisor.
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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.