For many Ontarians, the decision of when to start Canada Pension Plan (CPP) and Old Age Security (OAS) is one of the most important retirement choices they will make. Start too early and you could lock in lower payments for life. Start too late and you might miss years of income you could have used. There is no single best age for everyone. The best timing depends on health, life expectancy, tax planning, cash flow needs, and how your other income sources fit together.
This guide explains how CPP and OAS work, how the timing changes your monthly payments, and how Ontario retirees can make a confident decision that maximizes lifetime income.
The basics: CPP and OAS are different programs
CPP is a contributory pension. You earn it by contributing during your working years. The amount you receive depends on your contributions and how many years you contributed.
OAS is not based on employment contributions. It is based on residency in Canada. Most people qualify at 65 if they have at least 10 years of Canadian residency after age 18. The amount increases if you delay starting it.
Because they are different, the best time to start CPP is not always the same as the best time to start OAS.
CPP timing: start between 60 and 70
You can start CPP as early as 60 or as late as 70.
- Start before 65 and your monthly payment is reduced.
- Start after 65 and your monthly payment increases.
The adjustments are designed to be roughly actuarially fair, meaning the system tries to balance early payments against lower monthly amounts, and delayed payments against higher monthly amounts. However, your personal reality matters more than actuarial theory.
Reasons to consider starting CPP early
You need income now. If you are retiring at 60 to 64 and you do not have other income sources, CPP can reduce the need to draw heavily from RRSPs or taxable accounts early.
Health or shorter life expectancy. If you do not expect to live into your 80s, taking CPP earlier can improve your lifetime total.
You want to reduce market risk early. Some retirees prefer a steady government income stream so they can keep investments invested longer, rather than selling during a market downturn.
Reasons to consider delaying CPP
You expect longevity. If you have good health and family longevity, delaying CPP can produce higher lifetime income.
You want higher guaranteed income later. The increase for delaying can create a stronger baseline income that is inflation-indexed. This helps protect purchasing power over decades.
You are still working. If you earn a good income, starting CPP early may be less useful and more taxable. Delaying can also avoid stacking taxable income in the same years.
OAS timing: start between 65 and 70
You can start OAS at 65 or delay up to 70. Delaying increases the monthly amount. Unlike CPP, you cannot start OAS before 65.
Reasons to consider starting OAS at 65
You want the income right away. Many retirees use OAS to cover predictable monthly expenses like utilities or groceries.
Lower tax risk. If your total income in retirement is modest, starting OAS at 65 may not create a tax issue.
Reasons to consider delaying OAS
You expect higher income later. Delaying can help you avoid receiving OAS during years when you may face the OAS clawback, then collect a larger benefit later when income drops.
Longevity planning. A higher OAS payment later can be valuable as you age and other spending rises, especially on health and care needs.
The big Ontario-specific issue: OAS clawback
OAS is subject to a recovery tax, commonly called the OAS clawback. If your net income exceeds the annual threshold, you must repay part of your OAS. The more your income exceeds the threshold, the more OAS you lose.
This is where planning matters. In Ontario, many retirees have income from RRIFs, defined benefit pensions, rental properties, and corporate income that can push them into clawback territory. The goal is not always to avoid clawback at all costs, but to manage it strategically.
How RRSP and TFSA choices affect CPP and OAS timing
RRSP and RRIF withdrawals
RRSP and RRIF withdrawals count as taxable income and can push you into higher brackets and trigger OAS clawback. Many Ontarians benefit from “bridging” strategies.
A common approach is to withdraw some RRSP funds between retirement and age 71, when you must convert to a RRIF and begin minimum withdrawals. Planned early withdrawals can reduce the RRIF balance, lower future minimums, and potentially reduce OAS clawback later.
TFSA withdrawals
TFSA withdrawals do not count as taxable income. They do not affect OAS clawback. This makes the TFSA one of the best tools for smoothing retirement income.
In practice, many retirees use RRSP withdrawals early, then rely more on TFSA later, especially in years where income would otherwise exceed the OAS threshold.
A simple decision framework
Here is a practical way to decide.
Step 1: Estimate your longevity
This is not pleasant, but it is important. Consider personal health, lifestyle, and family history. If you expect a long retirement, delaying CPP and possibly delaying OAS often becomes more attractive.
Step 2: Map your income sources by age
List expected income from:
- Work or business
- Employer pensions
- RRSP and RRIF withdrawals
- TFSAs
- Non-registered investments
- Rental income
This makes it easier to see which years are high income and which are lower.
Step 3: Identify your bridge years
Bridge years are the years between retirement and when CPP and OAS begin. If you retire at 60 and delay CPP to 70, you need a ten-year bridge. That bridge might come from savings, part-time work, or a pension.
If the bridge requires heavy RRSP withdrawals that trigger high tax, delaying may not be worth it. If the bridge can be funded with TFSAs and non-registered assets in a tax-efficient way, delaying can be a win.
Step 4: Run a tax and cash flow model
This is where professional advice adds value. Compare scenarios:
- CPP at 60, OAS at 65
- CPP at 65, OAS at 65
- CPP at 70, OAS at 70
- Mixed timing, such as CPP at 70 and OAS at 65
The “best” option is the one that supports your lifestyle, controls tax, and provides peace of mind.
Common mistakes to avoid
Starting benefits without a plan. Many people start CPP and OAS as soon as they are eligible, then realize later they could have improved outcomes with smarter sequencing.
Ignoring tax brackets and clawback. Large RRIF withdrawals plus CPP and OAS can create a tax spike in your 70s. Plan earlier to avoid surprises.
Underestimating inflation and health costs. CPP and OAS are indexed, which is valuable later in life. Delaying can increase your indexed base.
Copying a friend’s strategy. Your income, health, and assets are unique. Timing should match your situation.
Final thoughts
CPP and OAS timing is one of the most important retirement decisions for Ontarians. The right choice depends on longevity, cash flow needs, tax planning, and how you use RRSP and TFSA withdrawals. For many people, delaying CPP and using a structured bridge can increase guaranteed lifetime income. For others, starting earlier provides stability and reduces the risk of drawing down savings too fast.
If you want a personalized analysis, Paul Engel Financial can help. We model different start ages, map tax impacts, and build a withdrawal strategy that supports your lifestyle while protecting your benefits. Contact us today and let’s design a retirement plan that makes your CPP and OAS work harder for you.
