OAS at 65 vs 70: a 36% raise, and the one group that should never take it

CPP gets all the "when should I start it" attention. Old Age Security has the same decision buried in it, with different numbers and one trapdoor that CPP doesn't have.

The offer

You can delay OAS past 65 in exchange for 0.6% more per month, for up to 60 months. Start at 70 and your pension is 36% larger, permanently, and still indexed to inflation every quarter.

At the current July–September 2026 maximum of $751.97 a month for ages 65 to 74, that's roughly:

• $751.97/month starting at 65 — about $9,024 a year
• $1,022.68/month starting at 70 — about $12,272 a year

A $3,248-a-year difference in today's dollars, for life.

The trade is five years of foregone payments — about $45,000 — to buy that raise. Crossing back over takes until roughly age 83 or 84, which is right around a 65-year-old Canadian's life expectancy. Statistically it's close to a coin flip. Which is why the break-even is the least useful number here.

Deferring OAS isn't really an investment bet. It's insurance against living a long time — a bigger, inflation-proof, government-backed cheque in the years when your portfolio is thinnest and you're least able to fix a shortfall.

The trapdoor: GIS

Here's the part that decides the question for a lot of people. The Guaranteed Income Supplement is only paid to people receiving OAS. Defer the pension and you defer GIS along with it — except GIS isn't deferrable. Those years are simply gone.

For a low-income senior, GIS can be worth more per month than the entire 36% deferral bonus, and unlike OAS it isn't taxable. If you're likely to qualify for GIS, take OAS at 65. No modelling required. Check where your income lands with the GIS calculator before you consider deferring anything.

The other side: the clawback

At the opposite end, deferral does real work. The OAS recovery tax takes back 15 cents of every dollar of net income above the threshold — $95,323 for income earned in 2026.

If you're still working at 65, or drawing a large pension, OAS you receive may be substantially clawed back anyway. Deferring moves the pension to years when your income is lower and lets it grow 36% in the meantime. Two cautions:

• A larger OAS at 70 is also more exposed to the clawback if your income stays high — RRIF minimums start at 72 and push it back up.
• Deferring does not avoid the recovery tax by itself. It only helps if your income actually drops later.

Run the threshold against your own numbers with the OAS clawback calculator, and sketch the full income path with the retirement income planner.

Three differences from the CPP decision

• The rate is lower. CPP grows 0.7% a month after 65 (42% at 70); OAS grows 0.6% (36%).
• OAS can be taken back. CPP is never clawed back on income. OAS is.
• There's no early option. CPP can start at 60. OAS cannot start before 65 — the only choice is 65 or later.

One thing that doesn't change either way: the 10% top-up at age 75 arrives on schedule regardless of when you started, lifting the current maximum to $827.17.

Quick decision guide

• Will you qualify for GIS? → Take it at 65.
• Still earning well above $95,000 at 65, with a clear drop later? → Deferring is probably worth it.
• Comfortable middle, decent health, long-lived family? → Deferring buys longevity insurance you can't buy anywhere else at this price.
• Health concerns, or you need the cash flow now? → Take it at 65.

If you're already past 65 and simply never applied, note that Service Canada will pay up to 11 months retroactively — but not for a period you formally chose to defer.

The takeaway

The OAS deferral is a 36% inflation-indexed raise with a five-year price tag and a break-even in your early 80s. For higher-income retirees expecting a genuine income drop, it's a strong play. For anyone headed for GIS, it's a straight loss — and that's the group most likely to be told, generically, to "wait for the bigger cheque."

Rates and rules: Service Canada, Old Age Security — when to start your pension and OAS payment amounts, July–September 2026 quarter.