How Does OAS Work in Ontario?

Old Age Security (OAS) is a monthly government benefit paid to most Canadians aged 65 and older. Unlike CPP, OAS is not based on your work history or contributions — it is funded through general government revenues and paid based on how long you have lived in Canada. For most Ontario residents, OAS will be one of the most reliable income sources in retirement.

OAS Eligibility: Who Qualifies?

To receive the full OAS pension, you must:

• Be 65 years of age or older
• Be a Canadian citizen or legal resident at the time your application is approved
• Have lived in Canada for at least 40 years after age 18

If you have lived in Canada for fewer than 40 years after age 18, you may still qualify for a partial OAS pension. The formula is: (years of Canadian residence after age 18) ÷ 40. So 30 years of residence would yield 30/40 = 75% of the full OAS amount.

If you lived or worked in a country that has a social security agreement with Canada, those years may help you qualify, though the calculation gets more complex.

How Much Does OAS Pay?

OAS payment amounts are adjusted quarterly for inflation using the Consumer Price Index (CPI). In 2025, the approximate maximum monthly OAS amounts are:

• Ages 65–74: approximately $713/month (~$8,556/year)
• Ages 75+: approximately $784/month (~$9,408/year) — a 10% increase was implemented for those 75+ starting in July 2022

OAS is taxable income. When you receive it, it is added to your total income for the year and taxed at your applicable marginal rate.

The OAS Clawback: What Ontario Retirees Need to Know

The OAS Recovery Tax — commonly called the "clawback" — is the most important planning element for higher-income retirees. If your net income exceeds a threshold (approximately $90,997 in 2025), you must repay 15 cents of OAS for every dollar of income above that threshold.

The full OAS amount is fully clawed back once income reaches approximately $148,000–$150,000.

This has direct implications for how Ontario retirees should structure their income:

• Large RRIF withdrawals in a single year can push income above the clawback threshold
• CPP, employment income, rental income, and investment income all count toward the threshold
• TFSA withdrawals do not count as income — they do not trigger the clawback

This is why drawing down RRSP assets earlier (perhaps in low-income years between retirement and age 65 or 71) can reduce future RRIF minimums and help keep income below the OAS clawback threshold in later years. It is a planning strategy, not a one-size-fits-all rule.

Can You Delay OAS for a Higher Payment?

Yes. Like CPP, you can defer OAS beyond age 65 to receive a permanently higher monthly amount. OAS increases by 0.6% per month (7.2% per year) that you defer, up to a maximum deferral of age 70.

Deferring from 65 to 70 increases your OAS by 36%.

The breakeven for deferring OAS to 70 versus taking it at 65 is roughly age 81–83, depending on assumptions. It can make sense to defer OAS if:

• You do not need the income immediately at 65
• You have other income sources (RRSP, TFSA, pension) that cover your expenses
• You expect to live well past 80
• Your income at 65–69 is already near or above the clawback threshold anyway

OAS and the Guaranteed Income Supplement (GIS)

For lower-income seniors, OAS is supplemented by the Guaranteed Income Supplement (GIS) — a tax-free, income-tested benefit layered on top of OAS. GIS is available to OAS recipients with low or no other income.

The maximum GIS in 2025 is approximately $1,065/month for a single senior. It phases out as other income rises, disappearing entirely for single seniors around $22,000 in annual non-OAS income.

If you are approaching retirement with modest savings and CPP, understanding the GIS thresholds can meaningfully influence how you structure withdrawals. TFSA withdrawals, for example, do not count as income for GIS eligibility purposes.

Planning OAS Into Your Retirement Income Strategy

At Pineault Wealth Management in London, Ontario, Marc Pineault helps clients integrate OAS into a broader retirement income plan that considers clawback risk, GIS eligibility, RRIF minimums, and TFSA sequencing. OAS is not just a cheque you receive at 65 — it is a planning variable with real tax implications.

If you are approaching 65 and want to understand how OAS fits into your retirement income picture, reach out to book a consultation.

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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.