As we cross the halfway mark of 2025, it’s the perfect time to reassess two key pillars of retirement income in Canada: the Canada Pension Plan (CPP) and Old Age Security (OAS).
These government benefits can form a significant part of your income, but they’re often misunderstood or underutilized. Whether you’re approaching retirement, recently retired, or in the middle of your drawdown years, a mid-year check-in on your CPP and OAS strategy can help you make smarter financial decisions — and avoid common mistakes that could cost you thousands.
Why Revisit Your Strategy Mid-Year?
By June, you have clarity on:
- Your income year-to-date
- How your investments are performing
- Any unexpected life events (e.g., part-time work, downsizing, health issues)
- Tax planning opportunities for the remainder of the year
This makes now a strategic moment to optimize your retirement income sources, especially when it comes to taxable benefits like CPP and OAS.
Understanding CPP: More Than Just a Monthly Cheque
The Canada Pension Plan is a contributory, earnings-related benefit. What many Canadians don’t realize is that you control the timing and size of your CPP payments, and your choices have long-term consequences.
🔹 CPP Fast Facts for 2025:
- Maximum CPP payment at age 65: $1,364.60/month
- Average CPP at age 65: ~$758/month
- You can start as early as age 60 (with a 36% reduction)
- Or delay to age 70 (with a 42% increase)
- CPP payments are indexed annually to inflation
When Should You Start CPP?
Let’s break this down with a quick comparison:
| Age You Start | Monthly Payment | Total Received by Age 75 |
| 60 (Reduced) | ~$873 | ~$157,140 |
| 65 (Standard) | ~$1,364 | ~$163,680 |
| 70 (Increased) | ~$1,936 | ~$145,920 |
Assumes consistent payments, for illustration only.
✅ Take early if:
- You need the cash flow now
- You have health concerns or a lower life expectancy
- You want to preserve personal savings for later
✅ Delay if:
- You expect to live past age 80
- You have other sources of income and can defer
- You’re concerned about outliving your money
OAS: Simpler on the Surface, But Watch for the Clawback
Old Age Security is a non-contributory benefit based on residency, not income history. It’s often seen as “free money” — but there’s a catch: the OAS Clawback, officially called the OAS Recovery Tax.
🔹 OAS Fast Facts for 2025:
- Maximum monthly OAS: $713.34
- Clawback starts if net income exceeds $90,997
- OAS is fully clawed back at ~$148,000 in net income
- Deferring to age 70 can boost payments by up to 36%
Avoiding the OAS Clawback
Imagine you’re earning income from a RRIF, corporate dividends, or real estate, and your net income for 2025 is projected at $95,000. That means you’re now in the clawback zone — and will lose part of your OAS.
3 strategies to minimize clawback:
- Use TFSA withdrawals, which aren’t counted as income.
- Withdraw from RRSP earlier to reduce future RRIF minimums.
- Income split with a lower-income spouse to smooth total household income.
Even a $1,000 reduction in net income could save over $150 in OAS clawback.
The Importance of Coordination
Too often, people think of CPP and OAS in isolation. But smart retirees know that timing your government benefits must be coordinated with:
- RRSP/RRIF withdrawals
- Investment returns
- Tax bracket management
- Health and longevity expectations
- Estate goals
Example:
Samantha, 66, is still working part-time and drawing a small income. She has a $500,000 RRSP and hasn’t started CPP or OAS. By delaying CPP and OAS until 70, and using RRSP withdrawals now to fill her income gap, she:
- Stays below the OAS clawback
- Draws down her RRSP at a lower marginal rate
- Locks in a higher CPP and OAS for life
Should You Defer CPP or OAS?
Here’s a simplified decision framework:
| Question | Action |
| Are you still working past 65? | Delay OAS (avoid clawback) |
| Do you have a large RRSP? | Consider early RRSP withdrawals before starting OAS |
| Are you healthy with longevity in your family? | Delay CPP/OAS if possible |
| Do you need guaranteed income now? | Start benefits earlier |
Integrating With a Retirement Income Plan
Your retirement income should come from multiple, tax-efficient buckets, including:
- Government benefits (CPP, OAS, GIS)
- Registered plans (RRSP/RRIF, TFSA)
- Non-registered investments
- Private pensions or corporate income
- Insurance products (annuity, whole life, etc.)
The goal? Ensure steady cash flow, minimize taxes, and protect against longevity risk.
Take Away
It’s easy to “set and forget” your CPP and OAS — but a mid-year review in 2025 can unlock opportunities to:
- Maximize your guaranteed income
- Avoid clawbacks
- Improve long-term tax efficiency
- Reduce the risk of outliving your money
Ready to Take Control of Your Retirement Income?
Whether you’re just starting to plan or already drawing from your savings, CPP and OAS decisions can make or break your retirement cash flow. Don’t leave it to guesswork.
Grab your copy of The Art of Retirement
Inside, you’ll learn:
- How to coordinate CPP, OAS, RRSPs, TFSAs, and pensions
- Strategies to reduce taxes and avoid the OAS clawback
- How to build a reliable income stream you can’t outlive
Start making informed, stress-free decisions with a proven process used by planners across Canada.
👉 [Buy The Art of Retirement now] and take the next step toward peace of mind and financial independence.
