CPP Timing vs OAS Timing — Which Decision Matters More in Ontario?

When you're approaching retirement in Ontario, two questions tend to dominate the planning conversation: when should I start collecting CPP, and when should I start OAS? Both decisions affect how much you receive for the rest of your life — permanently. But if you're wondering which one carries more financial weight, the honest answer is: it depends, and the difference can be substantial either way. Here is what you need to understand about each decision before you make either one.

The CPP Decision: A Wider Window, Larger Dollar Swings

The Canada Pension Plan is an earnings-based program. The amount you receive depends on how much you contributed over your working years and when you choose to start collecting.

You can start CPP as early as age 60 or as late as age 70. Starting early means accepting a permanent reduction — 0.6% for every month before age 65, which works out to a 36% reduction if you start at 60. Waiting past 65 increases your monthly payment by 0.7% per month, equal to a 42% boost if you hold off until 70.

That is a wide range. Someone entitled to $1,000 per month at 65 would receive just $640 at 60 — or $1,420 at 70. Over a 25-year retirement, the gap in lifetime income between those two choices can exceed $100,000, depending on the base amount. CPP is also fully indexed to inflation and guaranteed for life, regardless of market performance. For many pre-retirees in and around London, Ontario who do not have a defined benefit pension, CPP is the closest thing they have to one — which makes timing a significant lever.

The OAS Decision: A Narrower Window, But Far From Trivial

Old Age Security is different from CPP in one key way: it is based on how long you have lived in Canada, not on your work history. Most Canadians who have lived here for at least 40 years after age 18 receive the full amount.

You can start OAS at 65 or defer it up to age 70. Each month you delay adds 0.6% to your payment — a maximum 36% increase if you wait the full five years. The base OAS amount in 2024 is roughly $700 per month for most recipients, which is lower than the average CPP payment. So in raw dollar terms, the swing from deferral is smaller.

What makes OAS planning particularly nuanced in Ontario is the OAS Recovery Tax, commonly called the clawback. If your net income exceeds approximately $90,997 (the 2024 threshold, indexed annually), you repay 15 cents of OAS for every dollar of income above that line. If your retirement income puts you near or above that threshold, the timing of when you start OAS can interact with your tax picture in ways that matter.

Which Decision Usually Matters More — and When the Answer Flips

For most Ontarians, CPP timing carries more financial weight. The potential dollar difference is larger, the decision window is wider (age 60 to 70 versus 65 to 70 for OAS), and CPP is more directly tied to longevity risk — the longer you live past the break-even point, the more deferral pays off.

That said, OAS timing becomes the bigger lever in specific situations:

• High retirement income: If your income would trigger the OAS clawback, coordinating OAS start with RRSP or RRIF drawdown timing can reduce or eliminate money you would otherwise have to repay.
• Low income and GIS eligibility: Taking OAS at 65 can preserve access to the Guaranteed Income Supplement, which phases out sharply as income rises. Deferring OAS when GIS is on the table is a costly mistake that is easy to make and hard to undo.
• Couples with income imbalances: Spouses can start their CPP and OAS at different times to manage combined household income, stay in lower tax brackets, and reduce OAS clawback exposure across the household.

These factors do not operate in isolation. CPP timing affects taxable income, which affects OAS clawback exposure, which affects GIS eligibility. The decisions are deeply interconnected, and the right sequence for one person may be entirely wrong for someone with a similar age and similar savings but different health, pension income, or estate priorities.

Getting the Numbers Right Before You Choose

This is not a decision to make on instinct or based on what a neighbour did. The break-even calculations involve your projected income from every source, your health history, your spouse's situation, and Ontario's tax brackets — all layered together.

Marc Pineault is a financial planner in London, Ontario who works with clients to model CPP and OAS timing scenarios within their full retirement picture, including RRSP and RRIF drawdown strategy, spousal income splitting, and Ontario tax rates. If you are within five to ten years of retirement and have not yet run these numbers, now is the right time to start. Book a consultation with Marc to find out which timing decision matters most for your specific situation.

---

This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.