What is OAS?

I started reading about OAS when I was researching longevity risk for Canadian retirees. The question was simple: what government income can you actually count on lasting your entire retirement? CPP and OAS are the two pillars, and I assumed OAS was straightforward. Then I found the recovery tax. Most Canadians never learn the OAS clawback exists, but it matters if you are planning decades of withdrawals from registered accounts.

TL;DR: OAS pays up to about $752/month at 65 (more at 75+), but the recovery tax starts when your individual net world income exceeds about $93,454 (for the 2025 tax year). That is a high bar. The median income for Canadians 65+ is around $33,000, and maximum CPP plus OAS combined is only about $27,000/year. Only about 8% of OAS recipients are affected. But if you have a large RRSP, a defined benefit pension, or business income, the clawback can cost you thousands and changes when you should pull from your RRSP versus your TFSA.

What OAS actually is

Old Age Security is Canada’s largest public pension program. It is a monthly payment starting at age 65, based on how long you have lived in Canada, not on how much you paid into CPP during your working years. Service Canada publishes the full rules.

Unlike CPP, OAS is funded from general tax revenue. If you meet the residency requirements, you qualify regardless of your employment history. Low-income seniors who receive OAS may also qualify for the Guaranteed Income Supplement (GIS), which works very differently (50-cent clawbacks on every dollar of income).

Who gets it and how much

Basic requirements:

• Age 65 or older
• Canadian citizen or legal resident
• 10+ years of residency since age 18 (minimum for any OAS)
• 40+ years of residency since age 18 (for the full pension)
• Partial pension for 10 to 39 years (pro-rated at 1/40th per year)

For July through September 2026, the maximum monthly amounts are:

• Age 65 to 74: Up to $751.97 per month ($9,024 per year)
• Age 75+: Up to $827.17 per month ($9,926 per year, including the permanent 10% top-up)

Most Canadians who have lived here since adulthood receive the full amount. The numbers above are pre-tax. OAS counts as taxable income on your return.

The clawback most people miss

Here is the part that changes retirement planning: OAS is not truly universal once your income gets high enough.

The OAS recovery tax (often called the clawback) kicks in when your net world income exceeds $93,454 for the 2025 tax year. For every dollar above that threshold, you repay 15 cents of your OAS. At around $152,062 of income (ages 65 to 74), your OAS is fully clawed back.

Per person, not per household: The $93,454 threshold is assessed on each individual’s tax return. It is not a combined household number. A retired couple where each earns $90,000 keeps full OAS for both. Only when one person crosses the threshold does that person’s OAS start shrinking. For a couple, the effective ceiling before either spouse loses a dollar is roughly $186,908 combined ($93,454 × 2).

Who actually gets hit?

For most retirees, the clawback is irrelevant. The median individual income for Canadians 65+ is roughly $33,000, and the threshold sits near the 90th percentile of senior incomes. Maximum CPP and OAS combined is only about $27,000/year. You need substantial income beyond government benefits to reach $93,454.

The Globe and Mail estimated that about 8% of OAS recipients have some OAS clawed back, though that share is growing as RRSP-heavy boomers convert to RRIFs. The typical profiles:

• Large RRSP/RRIF balances. At age 71, RRSPs must convert to RRIFs with mandatory minimum withdrawals that escalate each year. A $1 million RRIF plus CPP can push you well past $93K.
• Defined benefit pensions. Public-sector retirees (federal employees, teachers, police) with indexed DB pensions stacked on top of CPP.
• Business owners liquidating assets or winding down a corporation in retirement.
• Investment income from non-registered portfolios (dividends, interest, capital gains from property sales).

If none of those apply to you, OAS will likely land in your bank account untouched.

Why it matters for those it does affect: RRSP and RRIF withdrawals count as income on your return. TFSA withdrawals do not. If you are near the clawback threshold, pulling from your TFSA instead of your RRSP in a given year can preserve thousands in OAS. The Withdrawal Strategy Planner lets you model drawdown order by age, including when CPP and OAS start.

Bob and Alice are both 67 and receive full OAS. Alice’s net income this year is $120,000 (RRIF withdrawals plus CPP). Bob’s is $30,000 (mostly CPP). The CRA assesses them separately:

• Alice: $120,000 minus $93,454 = $26,546 above the threshold. At 15%, her OAS clawback is about $3,982/year. She keeps roughly $5,042 of her ~$9,024 maximum OAS.
• Bob: $30,000 is well below $93,454. He keeps his full $9,024/year OAS.

Their household income is $150,000, but only Alice loses OAS. Bob’s benefit is untouched because his individual income never crossed the line. If Alice pulled more from her TFSA and less from her RRIF that year, she could have stayed under $93,454 and kept her full OAS too. The math depends on your exact numbers, which is why I like running scenarios in the Retirement Planner before locking in a drawdown plan.

Play with the numbers yourself in the OAS Benefits Estimator:

What this means for your retirement

OAS was never meant to cover all your expenses. It is a floor, one leg of the three-pillar retirement system (OAS/CPP, workplace pensions, personal savings).

For most readers, full OAS means about $9,000 of reliable annual income before taxes. Add average CPP benefits (roughly $9,700 to $10,100 per year at current rates), and you are looking at nearly $20,000 from the federal government before touching your own savings. Double it if both spouses qualify.

That is helpful, but not enough for most lifestyles. The other pillars matter. If you want the bigger picture on sequencing withdrawals, pensions, and DIY planning, read Considerations for Retirement.

Deferring OAS

You can delay OAS from age 65 to 70. Each month you wait adds 0.6% to your payment, for a 36% boost if you defer the full five years.

Example at current maximums: $751.97/month at 65 becomes about $1,022.68/month at 70.

Deferring makes sense if you have other income pushing you into the clawback zone now but expect that income to drop later (for example, after you finish large RRSP withdrawals). The breakeven for lifetime benefits is roughly age 80 to 82. Your health, cash flow needs, and other income sources decide whether waiting is worth it.

A note on who gets tested how

OAS clawback is one of the more generous income tests the federal government runs. Because the threshold applies per person, a retired couple can earn nearly $187,000 combined before either loses a dollar of OAS. For context, the Canada Child Benefit (CCB) starts phasing out for families at $37,487 of combined income. That is less than half of what one retiree can earn before losing a dollar of OAS. More on that comparison in a future post.

What to actually do

• Check your residency years on your My Service Canada Account to confirm whether you qualify for full or partial OAS.
• Model your retirement income in the Retirement Planner with CPP and OAS included, then see whether RRSP drawdowns push you past the clawback threshold.
• If you are near the clawback line, prioritize TFSA withdrawals over RRSP withdrawals in high-income years. Use the Withdrawal Strategy Planner to test the sequencing.
• Read What Is GIS? if you expect low retirement income. GIS clawbacks work differently and hit much harder.
• Play with clawback scenarios in the OAS Benefits Estimator. For official eligibility rules and application steps, see Service Canada’s OAS page.

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Dollar amounts in this article reflect 2025 tax year thresholds and Q3 2026 OAS payment rates. These values are indexed to inflation and change quarterly (payments) or annually (clawback threshold). For current numbers, use the OAS Benefits Estimator or check Canada.ca.