I was reviewing a cross-border retirement income plan recently when a couple told me that they didn’t believe they qualified for Canadian Old Age Security (OAS). After crunching the numbers, we determined they would receive over $700 a month from the Canadian OAS. This made a massive difference to their retirement plan. In this video, we discuss how to qualify for Canadian OAS and how much you may receive. Last, we discuss when you may want to turn on your Canadian OAS benefit.
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Video Summary
Cross-Border Retirement Income Planning
Bryan discussed a cross-border retirement income plan with a family approaching retirement who initially believed they wouldn’t receive Canadian OAS benefits due to short residency in Canada. However, upon calculation, they discovered they would receive over $700 per month in Canadian OAS benefits. Bryan, a certified financial planner and chartered financial analyst, explained that many of his clients are surprised by the total retirement income they can receive from both the US and Canada. This includes Social Security, CPP, and OAS benefits, which sometimes allow them to retire earlier than expected.
Canadian OAS Benefits Overview
Bryan explained the basics of Canadian OAS benefits, noting that eligibility is based on residency rather than work history, and benefits can be claimed as early as age 65 or delayed until age 70, with a 7.2% increase per year of delay. He mentioned that at age 75, there is a 10% bump, and the maximum benefit in 2025 is $740 CAD per month for those with 40 years of residency after age 18. Bryan clarified that most clients who moved to the U.S. earlier than 40 years after age 18 would still be eligible for some benefits, though likely less than the maximum.
U.S.-Canada Social Security Totalization
Bryan explained how U.S. Social Security and Canadian OAS can work together to help individuals qualify for larger benefits. He noted that typically, one needs to have lived in Canada for 20 years after the age of 18 to receive OAS, but the U.S.-Canada totalization agreement can make it easier to qualify with a combined total of 20 years of residence in Canada and U.S. Social Security contributions. Bryan provided an example of a client who lived in Canada for 15 years after age 18 and worked in the U.S., highlighting that such individuals may qualify for OAS benefits.
U.S. Work Impact on Canadian OAS
Bryan explained how U.S. Social Security can help individuals qualify for a higher OAS benefit in Canada, but the years of work in the U.S. do not increase the OAS amount. He clarified that OAS eligibility is determined by the number of years lived in Canada after age 18, and benefits can be claimed as early as 65 or delayed up to age 70. Bryan provided an example of different start dates and their impact on OAS benefits.
Understanding Canada’s OAS Benefits
Bryan explained the Old Age Security (OAS) benefit system in Canada, detailing how the amount increases with longer residency and age of benefit start. He clarified that only Canadian residency years count towards OAS eligibility, not U.S. work experience, and demonstrated how delaying the benefit from age 65 to 70 can significantly increase the monthly payment. Bryan concluded by asking when the best time is to start receiving OAS benefits, leaving the decision open between starting at 65 or delaying to 70.
Old Age Security Activation Strategy
Bryan explained that Old Age Security (OAS) is often the first benefit clients activate, but he considers it the least valuable among Social Security, CPP, and OAS due to its slow growth rate and lack of survivor benefits. He noted that OAS grows at a slower pace than CPP and Social Security, which both offer increased benefits for delayed claims. Bryan recommended starting OAS at age 65 or retirement, whichever is later, unless clients plan to continue working past 65.
OAS Benefits and Retirement Income
Bryan explained that turning on OAS benefits at retirement can provide immediate income, and noted that Social Security credits or years worked can qualify individuals for OAS. He mentioned that if someone has less than 20 years of Canadian residency after age 18, it could take up to two years to receive the first OAS payment, as Canada needs to verify U.S. work history. Bryan assured that if there is a delay, a lump sum back payment will be provided, which he noted can sometimes exceed $10,000.
Early Retirement Benefits Planning Strategy
Bryan advised starting the process early for retirement benefits, especially for those with less than 20 years of Canadian residency after age 18, and recommended applying up to 11 months before the desired benefit start date or age 65. He emphasized the importance of planning for cross-border retirement when individuals have benefits and assets in both the US and Canada. Bryan invited viewers to schedule a complimentary consultation on their website to discuss how they can assist with navigating complex cross-border financial plans.