CPP and OAS are the two pillars of government retirement income in Canada. Together, they can provide $20,000 to $25,000 per year — a significant foundation for your retirement income. Here is how each program works within a broader retirement income plan.
CPP vs OAS at a glance
| Feature | CPP | OAS |
|---|---|---|
| Based on | Employment contributions | Years of Canadian residency |
| Earliest start age | 60 | 65 |
| Standard start age | 65 | 65 |
| Latest start age | 70 | 70 |
| Maximum annual benefit (2026) | ~$16,400 (at 65) | ~$8,500 (at 65) |
| Average annual benefit | ~$10,000 | ~$7,500 |
| Taxable | Yes | Yes |
| Income-tested clawback | No | Yes (above ~$90,000) |
| Funded by | Employee and employer payroll contributions | General tax revenue |
| Indexed to inflation | Yes | Yes |
How CPP works
For contribution rules, start-age tradeoffs, and survivor benefits, see the full CPP guide.
The Canada Pension Plan is a mandatory program that you and your employer pay into throughout your working life. Your CPP benefit is based on:
- How much you contributed — Based on your employment earnings
- How long you contributed — More years of contributions means a higher benefit
- When you start collecting — Starting early reduces the benefit; delaying increases it
CPP amount by start age
| Start Age | Monthly Amount (% of age-65 benefit) | Approximate Annual (if max at 65) |
|---|---|---|
| 60 | 64% | ~$10,500 |
| 61 | 71.2% | ~$11,680 |
| 62 | 78.4% | ~$12,860 |
| 63 | 85.6% | ~$14,040 |
| 64 | 92.8% | ~$15,220 |
| 65 | 100% | ~$16,400 |
| 66 | 108.4% | ~$17,780 |
| 67 | 116.8% | ~$19,160 |
| 68 | 125.2% | ~$20,530 |
| 69 | 133.6% | ~$21,910 |
| 70 | 142% | ~$23,290 |
Delaying CPP from 65 to 70 increases your benefit by 42%. Use our CPP calculator to estimate your personal benefit.
How OAS works
Old Age Security is paid to most Canadians aged 65 and older. Unlike CPP, OAS has nothing to do with employment — it is based on how long you have lived in Canada.
For residency rules, GIS, and deferral strategy, see the complete OAS guide.
OAS eligibility
| Years of Canadian Residency (after age 18) | OAS Benefit |
|---|---|
| 40+ years | Full OAS (~$8,500/year) |
| 10–39 years | Partial (proportional: years/40 × full amount) |
| Less than 10 years | May not qualify (unless covered by international agreement) |
OAS clawback (recovery tax)
High-income retirees must repay some or all of their OAS:
| Net Income | OAS Impact |
|---|---|
| Below ~$90,000 | Full OAS paid |
| $90,000–$148,000 | Partial clawback (15% of income above threshold) |
| Above ~$148,000 | Full OAS clawed back to $0 |
Use our OAS clawback calculator to see how your income affects your OAS.
Maximizing your CPP and OAS
Delay if you can
Both CPP and OAS increase if you delay past 65. CPP grows 8.4% per year (to age 70), and OAS grows 7.2% per year (to age 70). If you have other savings to live on from 65 to 70, delaying provides a higher guaranteed income for life.
Manage your income to avoid OAS clawback
If your retirement income is near the $90,000 threshold, strategies like drawing down RRSPs before age 65 can reduce your income in OAS years and preserve your benefit. Use the OAS clawback calculator to test different income levels.
CPP sharing for couples
If both spouses receive CPP, you can split (assign) your CPP benefits to equalize income between you, potentially reducing the couple’s total tax bill.
GIS: the Guaranteed Income Supplement
Low-income seniors (individual income below ~$21,000) may qualify for GIS, an additional monthly payment on top of OAS. GIS is income-tested and not taxable. Use our GIS calculator to check eligibility.
CPP and OAS taxation in retirement
Both CPP and OAS are fully taxable as income. Planning withdrawals from RRSPs and RRIFs alongside these benefits is critical to managing your tax rate in retirement:
| Income source | Taxable? | Income-tested clawback? |
|---|---|---|
| CPP | Yes — ordinary income | No |
| OAS | Yes — ordinary income | Yes (above ~$90,997 in 2026) |
| GIS | No | Yes — reduced by non-TFSA income |
| RRSP/RRIF withdrawals | Yes | Counts toward OAS clawback and GIS test |
| TFSA withdrawals | No | No impact on any benefit |
| Non-registered capital gains | 50% included | 50% counts toward clawback |
| Non-registered eligible dividends | Gross-up applies | Grossed-up amount counts |
Key planning insight: TFSA withdrawals are the most flexible income source in retirement — they do not affect your tax rate, OAS clawback, or GIS eligibility. Build your TFSA as large as possible during working years and draw it last (or for unexpected expenses) in retirement.
Bottom line
CPP and OAS provide a meaningful retirement income foundation — potentially $20,000 to $25,000 per year at age 65. But for most Canadians, government benefits alone are not enough. You need personal savings in a TFSA, RRSP, or other accounts to fill the gap. Use our retirement calculator to see how your personal savings combine with CPP and OAS to fund your retirement.