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Understanding Old Age Security (OAS) in 2026

Old Age Security is a monthly pension paid to Canadians aged 65 and older. Unlike CPP, OAS is not tied to employment history — it is funded from general tax revenue and available to nearly all seniors who meet the residency requirement of at least 10 years in Canada after age 18. Full OAS requires 40 years of Canadian residency; fewer years results in a proportional (partial) pension. In 2026, the maximum monthly OAS payment is $743.05 for recipients aged 65–74, and $817.36 for those 75 and older, reflecting the permanent 10% enhancement introduced in 2022.

The OAS clawback — formally called the OAS Recovery Tax — reduces your pension if your net income exceeds the threshold. For 2026, the clawback begins at $95,323 of net income and recovers 15 cents of every dollar above that amount. OAS is fully eliminated once net income reaches approximately $154,753 (age 65–74) or $160,696 (age 75+). You can defer OAS by up to 60 months past age 65, increasing your pension by 0.6% per month (7.2% per year) of deferral, up to a maximum 36% increase at age 70.

OAS Key Figures (2026)

To minimize the OAS clawback, consider strategies such as splitting pension income with a spouse, drawing from your TFSA (which does not count as income), or timing RRSP/RRIF withdrawals to keep net income below the threshold. If you are still working past 65, deferring OAS can be advantageous because your higher employment income would trigger a larger clawback. OAS payments are indexed to inflation quarterly, ensuring purchasing power keeps pace with the Consumer Price Index.

When Should You Defer OAS?

The breakeven math is straightforward but the answer depends on three variables: your life expectancy, your current income, and whether you have other tax-advantaged savings (TFSA, non-registered) to bridge the gap. The 7.2% annual deferral bonus is risk-free, inflation-indexed, and effectively a guaranteed real return that no investment can match. Statistical breakeven for a healthy 65-year-old (who defers to 70) is around age 82–84 — meaning if you expect to live past that, you will receive more total OAS dollars by waiting. Canadians have an average remaining life expectancy at 65 of about 20 years (women) or 18 years (men), so most recipients benefit from at least partial deferral.

Defer if: (1) you are still working past 65 and would hit the OAS clawback at $95,323, (2) you have RRSP/RRIF or TFSA assets to draw from in the gap years, (3) your family history suggests long life expectancy, (4) you want to insure against longevity risk. Do not defer if: (1) you need the income now, (2) your income would qualify you for GIS (Guaranteed Income Supplement, which is lost if OAS is not taken), (3) you have a health condition that reduces life expectancy, or (4) you have no other retirement savings to live on between 65 and 70.