As retirement approaches, many Canadians wrestle with the decision of when to begin collecting government pensions—Old Age Security (OAS) and the Canada Pension Plan (CPP). While benefits typically start at age 65, delaying up to age 70 can significantly boost your monthly income.

But is waiting worth it?

In this post, we explore the benefits and drawbacks of delaying OAS and CPP beyond age 65—including an often-overlooked factor: how it affects your spouse or common-law partner if you pass away first.

📈 Benefits of Delaying OAS and CPP Beyond 65:

1. Higher Monthly Payments for Life

Delaying results in permanent increases:

• CPP: Rises by 0.7% for every month delayed after 65, up to a maximum 42% increase at age 70.
• OAS: Rises by 0.6% for every month, maxing out at a 36% increase at age 70.

This can make a significant difference, especially as costs rise due to inflation.

2. Inflation Protection

Both benefits are indexed to inflation. A higher base means bigger cost-of-living adjustments, protecting your purchasing power long-term.

3. Better for Longevity

If you expect to live into your late 80s or beyond, delaying may result in more total income across your lifetime.

4. Tax Planning Flexibility

Delaying benefits can create space for early retirement tax strategies, such as RRSP drawdown or converting RRSPs to RRIFs while in a lower tax bracket, potentially reducing lifetime tax and avoiding OAS clawbacks.

💔 Survivor Benefits: What Happens to Your CPP or OAS When You Die?

Many people overlook the impact of CPP and OAS decisions on their spouse or common-law partner, particularly if they outlive them. Here’s what happens:

CPP Survivor’s Pension

• If you delay and receive a larger CPP pension, your surviving spouse may receive a higher survivor benefit, but not the full amount you were receiving.
• The survivor pension is based on a formula that considers the survivor’s age and whether they are also receiving their own CPP.
• There’s a maximum monthly limit for combined CPP retirement and survivor benefits (around $1,400/month in 2025).
• Delaying CPP generally means more value passed on, but the survivor won’t receive 100% of your benefit.
• The surviving spouse is eligible to receive the benefit even if the deceased spouse has not started to receive CPP pension benefits.

OAS and the Survivor

• OAS is not transferable. There is no survivor benefit under OAS. Your payments stop at death, and your spouse cannot inherit them.
• However, your spouse may qualify for the Guaranteed Income Supplement (GIS) or Allowance for the Survivor, if they are low income and are between the ages of 60-64 at the time of your death.

Key Takeaway

• Delaying CPP may improve the survivor benefit somewhat, but there’s a cap.
• Delaying OAS won’t benefit your spouse after death, so if your main concern is spousal income protection, CPP matters more.

⚠️ Disadvantages of Delaying OAS and CPP

1. Need for Alternative Income Early On

You’ll need to self-fund the years between 65 and 70, using RRSPs, TFSAs, or other assets.

2. You Might Not Live Long Enough

The break-even point for delaying is usually around age 82–84. If you pass away before then, you may receive less overall.

3. Risk of OAS Clawback

If delaying results in higher income later in life, you could face the OAS clawback (starting at ~$90,000 in income per year in 2025).

4. Opportunity Cost

By not receiving income early, you lose the chance to invest or use that money during active retirement years.

🧮 A Quick Example

Let’s say your CPP at 65 would be $1,000/month. By waiting until 70, you’d get:

• $1,000 × 1.42 = $1,420/month
• Over 20 years (ages 70–90), that’s $340,800
• But you’d miss out on $60,000 from ages 65–70

If you live past age 82, the delay likely pays off. And for your spouse, if they survive you, they may receive a larger survivor pension based on your higher benefit.

👥 Should You and Your Spouse Coordinate?

Yes! Couples should consider:

• Staggering start times (e.g., one takes CPP early, the other delays)
• Maximizing survivor benefits with the higher-earning partner delaying
• Planning for what happens if one dies early—which can have major tax and income implications

🧭 Final Thoughts

Delaying CPP and OAS can be a smart move if:

• You’re in good health
• You have other income sources
• You want to maximize lifetime and survivor income
• You want to hedge against inflation and longevity risk

However, it’s not ideal if:

• You need income immediately
• You’re in poor health
• You want to maximize estate value over personal or survivor income