Even the most financially savvy among us may find it intimidating to think about retirement. It’s easy to avoid discussions about money, particularly when they pertain to a time in the far future. You’ll be in better shape later on if you have a better understanding of retirement income now. One of the world’s top retirement income plans is offered by the Canadian government. Old Age Security (OAS) and CPP (Canada Pension Payments) go a long way toward one’s retirement income. The amount of money you will receive for both of these programs will differ based on the age at which you choose to begin receiving them.

What exactly is OAS?

At age 65, every Canadian is entitled to a fixed income under Old Age Security. You must be between the ages of 18 and 65 and have lived in Canada for 20 years in order to be eligible for the maximum amount. You may still be eligible for it even if you haven’t resided in Canada for 20 years, but the amount you receive will be less. In this situation, you must be at least 65 years old and a resident of Canada for at least ten years. Upon application approval, you must also be a citizen of Canada or a permanent resident. The maximum payment per month at the moment is $666.83. This amount rises to $733.51 at the age of 75. If you make less than $129,757 per year, you are eligible for OAS.

What is CPP?

Throughout your working life, you and your employer will both contribute to the Canada Pension Plan, which provides retirement income. CPP will be deducted from each of your paychecks; you will receive this money back when you retire. This deduction is split evenly between you and your employer. But if you are self-employed, you will pay the full amount.

The annual maximum pensionable income for 2022 is $64,900, and the annual maximum CPP contribution is $3,500. Current pensioners receive an average monthly benefit of $702.77, while the maximum benefit is $1253.59. Your contribution rate throughout the course of your working life will determine how much you receive.

When do you have access to CPP?

Even though the typical retirement age is 65, you can start accessing your CPP retirement benefit as early as 60. This will result in a 0.6 percent penalty for each month you receive a payment before the age of 65. The payment will increase by 0.7 percent per month up until age 70, or a maximum of 42% more if you choose to wait until after age 65.

When do you have access to OAS?

OAS can be accessed at age 65, but some people choose to wait until age 70. If you decide to wait, the amount you’ll get increases by 0.6 percent each month (until you’re 70). Delaying payments after the age of 70 has no benefits.

When is the Ideal Time to Get OAS and CPP Payments

There is no straightforward way to determine when to begin earning pension benefits. To make a wise choice, you must take into account your financial and health status. Consider postponing payments if both your present health and your family history are good. On the other hand, you might think about taking them earlier if you depend on the money to maintain your standard way of living or if your health isn’t in the best state, despite the penalty.

Conclusion

Making the appropriate choice about the ideal time to get OAS and CPP payments will be simpler if all the relevant factors have been taken into consideration. It’s vital to take your time making a decision, but knowing how the system works can guarantee that you choose the option that is ideal for you.

If you can wait, it might make sense to do so, but if not, you shouldn’t push yourself to continue working. Our financial advisors at EmpireOne Credit can assist you in getting back on track if debt is causing you stress or making it difficult for you to plan for retirement. We can help reduce your debt by up to 80% and stop all interest. What better time than now to learn more? Get in touch with us right away for a free consultation.