The Canadian government has made a big move to help seniors by increasing the Old Age Security (OAS) payment to $1,615 per month in January 2025. This change comes as part of an effort to address the rising cost of living and ensure that older Canadians can maintain a decent standard of living. But what does this mean for you? Are you eligible for this increase, and how can you apply? Let’s break it all down for you.
What is the Old Age Security (OAS) Program?
The Old Age Security (OAS) program is a monthly payment designed to help Canadian citizens and legal residents who are 65 or older. Unlike the Canada Pension Plan (CPP), the OAS is not based on your work history. This means that even if you haven’t worked much or at all, you might still be able to qualify for this benefit.
OAS is funded through general tax revenue, and it is available to all seniors who meet the program’s requirements. The maximum monthly payment for OAS has been adjusted to $1,615 starting in January 2025. This increase is intended to help seniors manage the higher costs of living, which have been rising due to inflation.
Who is Eligible for the Increased $1,615 OAS Payment?
Basic Eligibility Requirements
To qualify for OAS benefits, you must meet the following criteria:
- Age: You must be at least 65 years old. OAS payments will start the month after your 65th birthday.
- Residency: You need to have lived in Canada for at least 10 years after turning 18.
- Citizenship: You must be a Canadian citizen or legal resident at the time of application.
Full vs. Partial OAS Payments
There are two types of OAS payments: full and partial.
- Full OAS: If you’ve lived in Canada for at least 40 years after turning 18, you qualify for the full OAS benefit of $1,615.
- Partial OAS: If you have lived in Canada for at least 10 years but less than 40, you’ll receive a pro-rated amount based on the number of years you’ve lived in Canada. For instance, if you’ve lived in Canada for 20 years, you could receive 50% of the full OAS payment.
What About the OAS Clawback?
There is an OAS clawback, or recovery tax, that reduces your OAS payments if your annual income is above a certain amount. In 2024, this threshold starts at $86,912. If your income exceeds this amount, you will have to repay part of your OAS.
Example of Clawback Calculation:
- If your income is $90,000, the amount over the threshold is $90,000 – $86,912 = $3,088.
- The clawback rate is 15%, so 15% of $3,088 = $463.20.
- This means you’ll have to repay $463.20 of your OAS benefits.
If you’re approaching the clawback threshold, you can consider strategies to reduce your taxable income, such as splitting your income with a spouse or contributing to Registered Retirement Savings Plans (RRSPs).
How to Apply for OAS Benefits
Step 1: Automatic Enrollment
Most Canadians will be automatically enrolled in OAS when they turn 64. If you haven’t heard from Service Canada about your OAS application, make sure to follow up. It’s essential not to miss out on this benefit.
Step 2: Manual Application
- Online: You can apply through your My Service Canada Account (MSCA).
- Paper Application: If you prefer, you can download the application form from the Government of Canada’s website and mail it in.
- Documents: Be sure to provide proof of age and residency, if required.
Step 3: Wait for Confirmation
Once your application is submitted, Service Canada will review it and send you an approval notification. Once approved, your OAS payments will begin the month after you turn 65.
Deferring OAS Payments: Should You Do It?
You can choose to delay your OAS payments for up to five years, which will increase your monthly benefit by 0.6% per month or 7.2% per year. If you defer for the full five years, your payment could increase by 36%.
Example of Deferred Payment:
- Standard OAS payment: $1,615
- Deferred payment after five years: $1,615 × 1.36 = $2,194.40
Deferring OAS payments might be a good option if you continue to work past age 65 or have other sources of retirement income. However, it’s important to weigh the increased future payments against the potential loss of income during the deferral period.
Why is the $1,615 Payment So Important?
This $1,615 OAS payment increase is a sign of the government’s commitment to supporting seniors, especially in a time of high inflation. The adjustment helps older Canadians cope with the increasing cost of living. Additionally, this increase demonstrates the ongoing efforts to provide fair financial support for Canada’s aging population.
Additional Support Programs for Seniors
Besides OAS, there are other programs available to help seniors:
- Guaranteed Income Supplement (GIS): This is for low-income OAS recipients and provides extra financial support.
- Allowance: This program helps individuals aged 60–64 who are married to or widowed from an OAS recipient, offering transitional support until they are eligible for OAS.
These programs, along with OAS, ensure that seniors have the financial help they need to maintain a reasonable quality of life during retirement.
Note: Every piece of content is rigorously reviewed by our team of experienced writers and editors to ensure its accuracy. Our writers use credible sources and adhere to strict fact-checking protocols to verify all claims and data before publication. If an error is identified, we promptly correct it and strive for transparency in all updates.
Premlata is a seasoned finance writer with a keen eye for unraveling complex global financial systems. From government benefits to energy rebates and recruitment trends, she empowers readers with actionable insights and clarity. When she’s not crafting impactful articles, you can find her sharing her expertise on LinkedIn or connecting via email at biswaspremlata@gmail.com.
