As you near retirement or begin planning for it, it’s essential to familiarize yourself with the Old Age Security (OAS) program. This Canadian government initiative offers monthly payments to eligible individuals, providing financial support during retirement. Here’s a summary of who is eligible for OAS, how the payments are structured, and the 2024 payment schedule.
OAS Payment Schedule 2024
Old Age Security (OAS) is a government pension program in Canada designed to provide regular financial assistance to people aged 65 and older. It is one of the main sources of income for seniors, alongside the Canada Pension Plan (CPP) and personal savings. OAS and CPP payments are typically issued on the same dates.
OAS Payment Schedule for 2024
Here are the OAS payment dates for 2024:
- September 25, 2024
- October 29, 2024
- November 27, 2024
- December 20, 2024
Funding for OAS
The OAS program is entirely funded by the federal government. Unlike CPP, Canadians do not contribute to OAS through deductions from their income.
Who Can Receive OAS?
To qualify for OAS, certain criteria must be met:
- You must be 65 years or older.
- You must be a Canadian citizen or legal resident.
- Residency: If you currently live in Canada, you need to have lived in the country for at least 10 years after turning 18. If you reside outside Canada, you must have lived in the country for at least 20 years.
Enrolling in OAS
Most people are automatically enrolled in the OAS program. You should receive a notification letter the month after you turn 64, confirming your enrollment. If you do not receive this, you may need to apply manually by submitting a form to Service Canada, either online or by paper.
Additional benefits may be available, such as the Guaranteed Income Supplement (GIS) for low-income seniors, or if you are widowed.
How Much Will You Receive in OAS?
OAS payments are adjusted quarterly—in January, April, July, and October—based on inflation. The amount you receive depends on:
- Years lived in Canada: To receive the full OAS benefit, you must have lived in Canada for 40 years or more after the age of 18. Partial benefits are available if you meet the minimum residency requirement of 10 or 20 years, depending on whether you live in or outside Canada.
- Starting age: You can begin receiving OAS at 65 or delay it up to five years. For every month you delay, your payments increase by 0.6%, meaning if you start at 70, your payments could be up to 36% higher.
- Income: If your income exceeds a certain limit, part or all of your OAS may be subject to a clawback, requiring repayment through the pension recovery tax.
Should You Delay OAS Payments?
Deciding whether to delay OAS payments depends on your financial situation. If you plan to continue working past 65 or have other income sources, delaying OAS could result in higher monthly payments. However, deferring beyond age 70 does not provide any additional benefit, so it’s important to begin collecting by then.
Are OAS Payments Taxable?
Yes, OAS payments are considered taxable income. You can choose to have taxes deducted from your payments automatically or make quarterly tax payments.
OAS Clawbacks
If your income goes beyond a specific amount, you may be required to repay part or all of your OAS benefits through what’s called the OAS clawback or pension recovery tax. This clawback starts once your annual net income surpasses a certain threshold, with 15% being deducted for every dollar over the limit.
For instance, in 2023, if your income exceeds $86,912, you’ll begin to repay part of your OAS benefits. If your income is much higher, you may have to repay the entire amount.
How to Avoid OAS Clawbacks
You can use various strategies to reduce or prevent OAS clawbacks, such as:
- Pension income splitting with a spouse
- Managing withdrawals from retirement accounts to stay below the income threshold
Consulting a financial advisor can help you structure your income to reduce the likelihood of clawbacks.
Guaranteed Income Supplement (GIS)
The GIS is a non-taxable benefit for low-income seniors who qualify for OAS. To be eligible, your annual income must fall below a certain threshold. In 2024, the threshold for single individuals is $21,768. For couples, the maximum income threshold can reach $52,176, depending on whether both partners receive OAS.
You can apply for GIS when you apply for OAS, and your eligibility is reassessed annually based on your previous year’s income.
Conclusion
The Old Age Security program is an important financial support system for seniors in Canada. Understanding how OAS works, who qualifies, and what factors influence your payments can help you make informed decisions as you plan for retirement.
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