What waiting to start OAS adds for each month you delay

Dear reader,

The Old Age Security pension can start at 65, but it does not have to. You can push the start back by any number of months up to age 70, and for each month you wait, the pension is permanently higher. The Government of Canada states the rule in a single line: payments increase by 0.6% each month, or 7.2% a year, up to 36% at age 70.¹

That sounds like an easy decision. It is not quite, because a higher monthly amount later means no payments at all in the meantime. This letter sets out the numbers, the break-even point, and the situations in which waiting makes no sense at all.

Where the choice is made

For most people the decision arrives in the post. If you are enrolled automatically, the letter that comes around your 64th birthday is the moment to tell Service Canada you want a later start; if you are asked to apply, you choose the start date on the application.² The two letters are explained in why some people get OAS automatically and others get a letter asking them to apply. Doing nothing after an enrolment letter means the pension starts at 65.

What each year of waiting adds

The Government of Canada’s own example uses the maximum pension for October to December 2026: $762.50 a month at 65, or $1,037.00 a month if started at 70.¹ The steps in between follow from the same 0.6% a month.

Worked example · illustrative

Start age	Months delayed	Increase	Monthly pension
65	0	—	$762.50
66	12	7.2%	$817.40
67	24	14.4%	$872.30
68	36	21.6%	$927.20
69	48	28.8%	$982.10
70	60	36.0%	$1,037.00

All rows use the October to December 2026 maximum for ages 65 to 74. In reality the base amount is adjusted every quarter for the cost of living, so a later start is calculated on the amounts in force at that time. Full 40-year pension assumed; a partial pension rises by the same percentage.

The break-even point

Waiting five years means giving up 60 monthly payments. At the amounts above, that is 60 × $762.50 = $45,750 not received between 65 and 70. In return, each payment from 70 onward is $274.50 higher. Dividing one by the other gives about 167 months, or just under 14 years. On these simplified figures, the person who waited comes out ahead only from roughly their 84th birthday.

That is a rough guide, not a forecast. It leaves out quarterly indexation, income tax, the OAS recovery tax for higher incomes, and the 10% increase at 75, which applies to both pensions in proportion. What it does show is the shape of the choice: delaying OAS is a bet on a long retirement and on not needing the money in your late sixties.

Important

The Guaranteed Income Supplement is only paid to people receiving OAS. While OAS is deferred, there is no GIS, and the GIS amount does not increase when OAS is delayed. The government’s own advice is that there is no benefit in waiting if you are eligible for the GIS.¹

When waiting makes no sense

If you are likely to qualify for the GIS. Deferring OAS means giving up both payments for every month you wait, in exchange for an increase that never touches the supplement. The GIS and its link to the tax return are explained in why the GIS depends on filing a tax return every year.

If you are already 70. The increase stops at 36%. The government’s retirement planning pages say there is no advantage in waiting beyond 70, and the risk is simply losing payments.³

If you need the income now. The arithmetic only works if the money you go without between 65 and 70 is money you can afford to go without.

When it can make sense

Deferral tends to suit people who are still working or have other income in their late sixties, people with family histories of long lives, and people whose income at 65 would bring a large part of the OAS back through the recovery tax.

There is also a residence angle. A partial pension is based on years lived in Canada after 18, divided by 40, and the official page notes that once you start receiving OAS, any additional time you live in Canada does not increase it.¹ Someone with, say, 36 years of residence at 65 who keeps living in Canada may want to ask Service Canada how a later start would be calculated in their case.

A separate decision from the CPP

The Canada Pension Plan has its own, separate rule for starting later, with a different monthly increase, and the two choices are independent. Some people start one pension at 65 and delay the other; the government’s retirement planning pages walk through both together.³ What matters for the OAS decision is the income you will have between 65 and 70 without it, which is why it often helps to settle the CPP question first. Each partner in a couple makes their own choice, on their own letter.

Who this matters for

• Anyone aged 63 to 64 who is about to receive the enrolment letter.
• Anyone with a modest income who might be eligible for the GIS: check that first.
• Couples deciding together, since each partner’s OAS start is a separate choice.
• Anyone with fewer than 40 years of residence in Canada.

The takeaway

Each month of patience adds 0.6% for life, and the break-even on simple figures sits somewhere in the mid-eighties. That is a real gain for some and a poor trade for others, especially anyone who would otherwise receive the GIS. The decision is made once, usually on a single letter, so it is worth making on purpose. File the letter you answered in the OAS pocket of your folder.

P.S. The next letter goes out on Tuesday. If it does not reach you yet, the reply card is below.