OAS can normally begin at age 65 and can be delayed to age 70. Delaying increases the pension by 0.6% per month. High net income can trigger the OAS recovery tax, so RRIF withdrawals, pension income and pension splitting can materially change the result.
OAS at 65 versus delaying to 70
OAS can begin at 65 or be delayed as late as 70. The federal government increases OAS by 0.6% for each month of delay, up to a maximum 36% increase at age 70. Unlike CPP, OAS cannot begin before 65.
Delaying can be attractive when other assets can fund the early retirement years, but it is not automatically better. People eligible for GIS, for example, need to consider different rules and incentives.
How the OAS recovery tax works
The recovery tax is commonly called the OAS “clawback.” It is calculated from an individual’s net world income. For the 2026 income year, the published minimum recovery threshold used for the July 2027 to June 2028 recovery period is $95,323. The recovery tax is 15% of income above the applicable threshold, limited by the OAS received.
Thresholds change, and OAS recovery periods are based on prior-year income, so always verify the current government table before making a tax decision.
Retirement income that can influence OAS
RRSP/RRIF withdrawals, taxable pensions, employment income, interest and taxable capital gains can increase net income. TFSA withdrawals do not count as taxable income and therefore do not directly increase OAS recovery tax. For couples, eligible pension-income splitting may reduce one spouse’s net income and increase the other’s, which can change each spouse’s OAS recovery separately.
How the planner models OAS
The planner can estimate OAS eligibility from residence history, compare starting at 65 or 70, and estimate OAS recovery tax inside the annual retirement projection. When eligible pension income exists, the household tax optimizer can evaluate pension splitting while considering OAS recovery for each spouse.
Test OAS timing and recovery tax
Compare OAS timing alongside RRIF withdrawals, pension splitting, CPP and TFSA strategy.