Planning for retirement involves understanding the various benefits available to you. In Canada, the Canada Pension Plan (CPP) and Old Age Security (OAS) are critical components of retirement income for many senior citizens.
Knowing how much you can receive from these programs combined can help you plan your finances better. Here’s a detailed look at CPP and OAS, their maximum benefits, and how you can maximize your retirement income.
CPP+OAS Amount
The Canada Pension Plan (CPP) provides a monthly, taxable benefit designed to partially replace your earnings in retirement. The amount you receive depends on your contributions during your working years and the age at which you start receiving the benefit.
Maximum and Average Payments
- Maximum Monthly Amount (2023): $1,306.57
- Average Monthly Amount (2023): $772.71
To receive the maximum CPP payment, you need to have made significant contributions throughout your working life. Additionally, starting your CPP at age 70 can increase your monthly amount.
Post-Retirement Benefits
If you continue to work while receiving CPP, you can also qualify for post-retirement benefits, which can further increase your total monthly payment. The maximum post-retirement benefit for 2023 is $40.25 per month.
Survivor and Disability Benefits
- Combined Survivor’s and Retirement Pension: $1,313.13 per month
- Combined Disability and Survivor’s Pension: $1,542.77 per month
These benefits combine various elements to provide additional support depending on your circumstances.
OAS Overview
Old Age Security (OAS) is a monthly payment available to most Canadians aged 65 and older. It is funded by the government and does not require contributions.
Maximum Payments
- Ages 65-74: $707.68 per month
- Ages 75 and Over: $778.45 per month
Your OAS payment amount depends on how long you have lived in Canada after the age of 18.
Guaranteed Income Supplement (GIS)
For low-income seniors, the GIS provides additional financial assistance. Eligibility for GIS is tied to your OAS benefits and overall income.
Combining CPP and OAS
Maximum Combined Payments
If you are eligible for the maximum benefits from both CPP and OAS, here’s what your combined monthly income could look like:
- Ages 65-74: $2,014.25 ($1,306.57 CPP + $707.68 OAS)
- Ages 75 and Over: $2,085.02 ($1,306.57 CPP + $778.45 OAS)
These amounts represent the highest possible combined payments and may vary based on your specific situation.
Planning for Maximum Benefits
To maximize your retirement income from CPP and OAS, consider the following strategies:
- Delay CPP and OAS Benefits: Starting CPP at age 70 can increase your benefit amount. Delaying OAS until 70 also increases your monthly payment.
- Continue Working: Working past 65 and contributing to CPP can increase your post-retirement benefits.
- Income Splitting: Pension income splitting can reduce your taxable income, potentially increasing your after-tax retirement income.
- Understand GIS Eligibility: If your income is low, ensure you apply for GIS to receive additional support.
Application Process
CPP Application
- Online: Apply through your My Service Canada Account.
- Mail: Download and complete the CPP retirement pension application form and send it to Service Canada.
OAS Application
- Online: Apply through your My Service Canada Account.
- Mail: Download and complete the OAS application form and send it to Service Canada.
Applying a few months before your 65th birthday ensures timely commencement of benefits. However, if you wish to delay, you should still apply before turning 70 to avoid missing out on increased payments.
Understanding and planning for CPP and OAS benefits are crucial for securing your financial future in retirement.
By knowing how much you can receive and implementing strategies to maximize these benefits, you can better manage your retirement income and enjoy a more comfortable retirement.
FAQs
How much is the maximum CPP payment in 2023?
The maximum CPP payment in 2023 is $1,306.57 per month.
What is the maximum OAS payment for those aged 75 and over?
The maximum OAS payment for those aged 75 and over is $778.45 per month.
Can I receive both CPP and OAS?
Yes, eligible individuals can receive both CPP and OAS payments.
How can I increase my CPP benefits?
Delaying CPP benefits until age 70 and continuing to work and contribute to CPP can increase your benefits.
When should I apply for OAS?
You should apply for OAS a few months before your 65th birthday, or before 70 if you plan to delay.
