How To Increase OAS Benefits In 2025: Old Age Security (OAS) is one of Canada’s most important programs for seniors, providing monthly payments to individuals 65 years or older. For many Canadians, maximizing these benefits in retirement is a key concern. As the program continues to evolve, 2025 offers new opportunities for individuals to increase their OAS benefits through strategic decisions, smart planning, and understanding how various factors impact the amount you receive. Whether you are a soon-to-be retiree or already receiving OAS, this guide will break down the steps you can take to boost your monthly benefit.
In this article, we’ll explain how the OAS system works, when and how to start receiving benefits, and how you can optimize your payments through strategies like deferring OAS, managing your income, and understanding key government policies.
How To Increase OAS Benefits In 2025
| Key Fact | Detail |
|---|---|
| OAS Eligibility | Available for Canadian citizens and legal residents 65+ |
| Full OAS Amount | Requires 40 years of Canadian residency post-18 |
| OAS Deferral | Increases benefits by 0.6% for every month delayed (up to 36%) |
| OAS Clawback Threshold | 2024 clawback begins at $87,397 in annual income |
| Additional Benefits | GIS and other provincial senior benefits may apply |
| Tax Considerations | OAS is taxable income and may be subject to a recovery tax |
For official details, visit the Government of Canada’s OAS page here.
Maximizing your OAS benefits is a crucial aspect of planning for a comfortable and secure retirement in Canada. By understanding the system, deferring your benefits, managing your income strategically, and considering options like the Guaranteed Income Supplement (GIS), you can increase your monthly payments and reduce the impact of the OAS clawback. With careful planning, you can ensure that your OAS provides the full support you need throughout your retirement years.
Whether you’re planning for the future or already receiving OAS, it’s important to understand how these factors can affect your overall retirement strategy. If you’re unsure of how to proceed, working with a financial advisor can provide tailored advice that suits your individual needs.
What is OAS, and How Does it Work?
Old Age Security is a federal program designed to provide a monthly payment to Canadian seniors based on their age and how long they’ve lived in Canada. The amount you receive depends on several factors, including your residency in Canada, your age when you start receiving OAS, and whether your income exceeds certain thresholds.
OAS is funded through general tax revenues and not directly tied to your personal contributions, unlike the Canada Pension Plan (CPP). However, just like CPP, OAS benefits are considered taxable income, and depending on your income level, you could be subject to the OAS clawback, where the government reduces your benefit amount.
The OAS Clawback begins if your net income exceeds a specific threshold. For 2024, this threshold is set at $87,397. If your income is higher than this, you will need to repay a portion of your OAS benefit, potentially even losing it entirely.
Why Increase OAS Benefits?
While OAS provides a base level of financial support, many seniors are looking for ways to increase their benefits, especially as the cost of living continues to rise. By maximizing your OAS benefits, you can ensure a higher and more sustainable retirement income.
Some common reasons for wanting to maximize OAS benefits include:
- Improving retirement security: A higher OAS payment can help bridge the gap if you don’t have sufficient personal savings or additional pension plans.
- Avoiding financial stress: The increased amount can help reduce reliance on other forms of income, providing a more stable financial situation in retirement.
- Strategic retirement planning: By deferring OAS or using tax strategies, you may be able to get more out of the program.
Now that we understand the importance of OAS, let’s dive into the strategies you can use to maximize your OAS benefits in 2025.
How to Maximize Your OAS Benefits in 2025
1. Ensure Full OAS Eligibility Through Residency
One of the easiest ways to increase your OAS benefit is by meeting the full eligibility criteria. To receive the maximum OAS amount, you need to have lived in Canada for at least 40 years after the age of 18.
If you haven’t lived in Canada for the full 40 years, your OAS payment will be pro-rated. For example, if you’ve lived in Canada for 30 years, you’ll receive 75% of the maximum benefit. The more years you’ve lived in Canada after turning 18, the closer you’ll get to the maximum OAS benefit.
If you haven’t met the 40-year residency requirement but plan to stay in Canada longer or return, it could be worth considering staying a few more years to hit that threshold.
2. Defer OAS Benefits to Increase Payments
One of the most powerful ways to increase your monthly OAS payment is by deferring your OAS until after you turn 65. While you must start receiving OAS by age 70, there is a 0.6% increase in your monthly benefit for every month you delay. By deferring your benefits for the maximum period (until age 70), you can see a 36% increase in your monthly benefit.
For example, if your monthly OAS payment would have been $1,000 at age 65, deferring it for five years would boost your payment to $1,360 per month. While waiting until age 70 might not be ideal for everyone, it’s a great option if you have other sources of income or are in good health and expect to live longer.
3. Be Aware of the OAS Clawback
The OAS clawback affects individuals with higher incomes. If your net income surpasses $87,397 (as of 2024), you will start losing your OAS benefits. The government will gradually reduce your payments until your income exceeds a second threshold, at which point you may lose your OAS entirely.
Tips to Minimize the Clawback:
- Income splitting: If you’re married or have a common-law partner, you may be able to reduce your household income by splitting pension or retirement income.
- Tax-deferred savings: Contribute more to your RRSP (Registered Retirement Savings Plan) to lower your taxable income, and consider withdrawing funds from RRSPs or RRIFs (Registered Retirement Income Funds) in years when your income is otherwise low.
- Tax-free savings: Invest in a Tax-Free Savings Account (TFSA). Withdrawals from a TFSA do not count as taxable income, which can help you avoid exceeding the OAS clawback threshold.
4. Understand the Guaranteed Income Supplement (GIS)
If your income is below a certain threshold, you may be eligible for the Guaranteed Income Supplement (GIS), which provides additional income for low-income seniors. GIS is not taxable and is not reduced by the OAS clawback, so it can provide important financial relief if your OAS benefits are clawed back.
Eligibility for GIS depends on your income and whether you’re receiving OAS. If your income is relatively low, the GIS could significantly supplement your OAS payments.
5. Plan for Taxes on OAS
OAS payments are subject to taxation, so it’s important to factor in the tax implications when considering your OAS strategy. If your total income exceeds a certain threshold, you may pay more in taxes on your OAS benefits.
- Work with a financial advisor: To avoid surprises, it’s a good idea to consult a tax professional or financial advisor who can help you manage your income strategically and ensure that your OAS payments are taxed efficiently.
- Use tax credits: Seniors are eligible for various tax credits like the Age Amount, Pension Income Tax Credit, and Disability Tax Credit, which can reduce your taxable income and help minimize the impact of OAS taxation.
Current OAS Payments & Projections for 2025
For 2024, the maximum OAS monthly payment for a senior living alone is $1,235.03. However, this amount is subject to quarterly inflation adjustments, which can slightly increase your payment over time. For 2025, it’s expected that inflation will continue to play a role in adjusting OAS to reflect the cost of living.
- Monthly Payment (2024): $1,235.03
- Annual Payment (2024): $14,820.36
While inflation adjustments are not massive, they do help ensure that the value of OAS keeps pace with rising prices, especially for essentials like food, housing, and healthcare.
It’s also important to note that the OAS clawback threshold is not automatically adjusted for inflation, meaning that if your income increases along with inflation, you might find yourself nearing the clawback threshold. Therefore, keeping your taxable income lower than this threshold becomes even more crucial.
The Impact of Inflation on OAS
The cost of living has been rising steadily, which makes it essential for seniors to account for inflation in their long-term financial planning. OAS is adjusted quarterly for inflation, but many fixed-income retirees find that even these adjustments may not keep up with the full cost of rising prices, especially in areas like housing and healthcare.
It’s important to factor inflation into your overall retirement strategy. Having additional income sources, such as private pensions, RRIF withdrawals, or investment income, can help offset any shortfalls caused by inflation.
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Tips for Dealing with Inflation:
- Consider deferring OAS This allows your monthly payments to increase at a compounded rate.
- Invest in inflation-protected assets: Government bonds or certain stocks might be good ways to hedge against inflation.
- Review your budget: Make sure you account for rising costs and adjust your retirement spending accordingly.
