What is Old Age Security (OAS) in Canada?
Old Age Security (OAS) is a monthly pension that the Canadian government provides to seniors aged 65 and older. To qualify for OAS, you must have lived in Canada for at least 10 years after turning 18. If you have lived in Canada for 40 years or more after age 18, you may be eligible for the full OAS pension. The amount you receive depends on the number of years you have lived in Canada after turning 18.
OAS is available to Canadian citizens and legal residents and is not dependent on your employment history or whether you are still working. However, if your income exceeds certain thresholds, your OAS benefits may be reduced due to a clawback, also known as a recovery tax.
Understanding the OAS Clawback and Recovery Tax in 2024
In 2024, if your annual income exceeds $90,997, 15% of the amount over this threshold will be clawed back from your OAS payments. The OAS clawback is fully applied, meaning your entire benefit is reduced to zero, if your income reaches $148,065 for retirees aged 65 to 74, and $153,771 for those aged 75 and older.
What is the Guaranteed Income Supplement (GIS)?
The Guaranteed Income Supplement (GIS) is a non-taxable pension provided to OAS recipients with low income who are living in Canada. GIS is designed to provide additional financial support to seniors who have little or no other income. To qualify for GIS, you must file an annual tax return and already be receiving OAS.
Eligibility Criteria for the Guaranteed Income Supplement (GIS)
To be eligible for GIS, you must currently be receiving OAS and your annual income (or combined income in the case of couples) must be lower than the maximum annual thresholds for 2024:
- Single/divorced/widowed: $21,264
- Couple, spouse receives full OAS: $28,560 (combined income)
- Couple, spouse does not receive OAS or allowance: $51,840 (combined income)
- Couple, spouse receives the allowance: $39,984 (combined income)
If your income or combined income exceeds these thresholds, you won’t qualify for GIS. Additionally, if you defer your OAS payment, you will not be eligible for GIS, and your spouse or partner will not be eligible for the allowance.
How Much Can You Receive in GIS Benefits in 2024?
The amount of GIS you receive depends on your marital status and your previous year’s income or combined annual income in the case of couples. The maximum monthly GIS amounts for individuals receiving the maximum OAS in 2024 are:
- Single/divorced/widowed: $1,065.47
- Couple, spouse receives full OAS: $641.35
- Couple, spouse does not receive OAS or allowance: $1,354.69
- Couple, spouse receives the allowance: $641.35
GIS is a crucial benefit for seniors with low income, helping to ensure they have enough financial support during retirement.
How Income Affects Your OAS and GIS Payments
Both OAS and GIS are vital components of Canada’s retirement system, providing essential income support to seniors. However, your income level significantly affects the amount of OAS and GIS you receive. Understanding the thresholds and clawback rules can help you plan your retirement income strategy effectively.
Take the Next Step: Secure Your Retirement
Navigating the complexities of OAS, GIS, and retirement planning can be challenging. To ensure you’re making the best decisions for your future, it’s essential to consult with a knowledgeable financial planner. They can provide personalized advice tailored to your unique situation, helping you maximize your retirement benefits.
Additionally, for comprehensive guidance on retirement planning, consider purchasing “The Art of Retirement”—a valuable resource that covers key strategies, including maximizing your OAS and GIS benefits, investing wisely, and planning for a comfortable retirement. Start your journey towards a secure financial future today.
