“CPP and OAS Explained: How Much Will You Get?”

Planning for retirement is an important part of everyone’s life, and understanding the benefits you can receive is crucial. In Canada, two major sources of retirement income are the Canada Pension Plan (CPP) and the Old Age Security (OAS). This article explains how much you can get from combining CPP and OAS, what factors affect these amounts, and how to maximize your benefits.

What Are CPP and OAS?

Canada Pension Plan (CPP)

The Canada Pension Plan (CPP) is a retirement pension that provides a monthly payment to people who have contributed to it during their working years. The amount you receive depends on your contributions, the number of years you contributed, and the age you start receiving your pension.

Old Age Security (OAS)

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The Old Age Security (OAS) is a monthly payment available to seniors aged 65 and older. Unlike the CPP, OAS benefits do not depend on your work history but are based on your age and residency in Canada.

How Much Will You Get as CPP and OAS Combined?

Maximum CPP Benefits

If you meet all the requirements and start your CPP at age 70, you can receive more money each month. The maximum CPP payment changes yearly due to factors like the cost of living. Currently, the maximum amount is $1,306.57 per month, while new beneficiaries average around $772.71 per month.

You can also get CPP post-retirement benefits. In 2023, the maximum post-retirement benefit is $40.25 per month. If you receive a combined survivor’s and retirement pension, the maximum payment is $1,313.13 per month. For a combined disability and survivor’s pension, the maximum is $1,542.77 per month.

Maximum OAS Benefits

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The maximum OAS benefit for individuals aged 65 to 74 is $707.68 per month. For those over 75, the maximum is $778.45 per month. Additionally, you might qualify for the Guaranteed Income Supplement (GIS) if you receive OAS and have a low income.

Full Benefits Explained

Criteria for Maximum Benefits

To receive the full benefits of CPP and OAS, you must meet certain criteria. For CPP, the amount depends on your contributions and the age you start receiving benefits. For OAS, your residency in Canada and age are key factors.

Factors Affecting CPP Amount

1. Continuing to Work: If you keep working while receiving your pension, you can qualify for CPP post-retirement benefits, increasing your monthly payments.
2. Additional Contributions: If you contribute to CPP after age 65, these contributions can replace years of low or no contributions, boosting your benefits.
3. Pension Sharing: Sharing your CPP pension with your spouse can reduce your taxable income, potentially lowering your taxes.

Factors Affecting OAS Amount

1. Delaying OAS: You can start receiving OAS at 65, but delaying it can increase your monthly payment. However, there’s no benefit to delaying past age 70.
2. Income Threshold: If your income exceeds a certain threshold, you may have to repay part of your OAS. For example, in 2022, if your income exceeded $81,761, you would have to repay the excess amount.

Impact of Delaying Benefits

Delaying CPP or OAS can affect other benefits like the GIS. If you delay OAS, your spouse might also miss out on the GIS allowance.

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Planning for retirement in Canada involves understanding your CPP and OAS benefits. By knowing the criteria and factors that affect these pensions, you can maximize your retirement income. Whether it’s continuing to work, making additional contributions, or deciding when to start your benefits, careful planning can ensure you get the most out of your CPP and OAS.