I think number 4 is actually a reason to defer, and it’s interlocked with five. When I see “preserving one’s own assets” I read “relying on one’s own assets” and I am firmly in the camp where I am not in a position to guarantee myself a guaranteed monthly payment that rises with inflation on a quarterly basis. I will readily turn that risk over to the government and take the 36% increase; hands down. Yes, I have to use my own assets earlier (e.g. RRSP meltdown) but moving the risk away from me to the government is well worth it. It’s a significant risk for me, as an individual to take on, and the value is there. A few other thoughts. I’m tired of pandering to people who don’t trust the government. We continue to see the rollout of much needed plans like the dental benefit. It’s a great sign that social programs are not at risk (at least with the current government). The voting block of seniors is such that any meaningful reductions to retiree social programs would be the death knell for the government in power (as it was when the conservatives tried to raise the age of eligibility for OAS to 67). Also, I think the one reason you missed is if one has a DB pension with a bridge benefit that ends at age 65. I think many retirees in this situation should strongly consider taking OAS at 65 as a replacement for their bridge benefit and defer CPP if possible. I don’t think it’s appropriate to be using basic life expectancy statistics for retirement planning. Yes, at age 0 the average life expectancy for a male in Canada is 81.75 years but this stat includes everyone who passed before age 65. What we want to understand is what is the average life expectancy after reaching age 65, when the decision has to be made. Current statistics suggest for a male, that’s about 84-85. It’s higher for females. That’s roughly a 15% increase in life expectancy, so that is meaningful. I strongly agree with the other reasons. Needing the income is for sure number one, especially where GIS is concerned but I fear there are a number of advisors who would rather keep their client’s portfolios under management, continuing to take fees. As such, there is risk that they don’t always give unbiased advice when it comes to recommending the timing of OAS (or CPP). This is why I believe it’s critical to separate portfolio management from financial planning. The planner, in my opinion, shouldn’t have any skin in the game regarding portfolio longevity. But for those of us who DIY invest, having a CFP make recommendations for asset decumulation can be invaluable. Great video and good food for thought.
A man after my own heart, I too have delayed both CPP & OAS to age 70. LIke you "I am firmly in the camp where I am not in a position to guarantee myself a guaranteed monthly payment that rises with inflation on a quarterly basis. I will readily turn that risk over to the government and take the 36% increase; hands down". If you will receive the GIS then you more than likely need the OAS money and there's no sense in delaying. All the other reasons, in my mind, are to justify the "I want my money and I want it now" gut feeling that most people actually base their decision on. By the way, as I discovered, if you delay you will have to put in an application for OAS to get it started and do this at least 6 months before you want it to start. Both my wife and I applied to start our OAS the first of the month after we turned 70 and the normal advice of "at least 3 months ahead" isn't enough, it's six months minimum. They will give you the back payments, up to 12 months, but it's annoying when you do everything they say plus a follow up phone call at the 150 day mark (they won't do anything before that when you call to ask why hasn't it been approved yet) and it's still delayed to 6 months from the application anyway.
My wife and I are delaying OAS for tax reasons and cash flow management. I am delaying to age 66 and my wife to age 68. This will allow us to manage the withdrawals of our RRSP in order to covert the proceeds into tax free vehicles and secondly, to minimize the 15% clawback of OAS. With this strategy, we are able to maximize our net cash flow by roughly 5.34%.
Thanks! And agree with you on a bunch of points. The longer you live, the more it makes sense to delay. For sure. And yes, for our projections we usually use age 90. But this video isn’t about my preferences, it about why most people are not delaying. The video with all the reason to delay is in the hopper :) Cheers
Thank you for this comment. I too am tired of all the federal government-bashing. There are always things to critique, but there are also things to applaud. But we do seem to live in times where some people are just hyperbolic and melodramatic almost out of habit. Your point about separating portfolio management from financial planning is also excellent. And rarely made.
I will be 65 soon and because of other income streams and great genes, I was going to delay to 67-70. However I'm wondeirng now if it is worth the risk. Everyone is living in a delusion that the gov't (and world) is 'safe' and things will continue in next decades as the past decades. ... some hint in this video of your/his concern. Some ight think that I'm sort of 'eco-freak' NUT ... no, .. realist. there is lots of evidence that all the financial troubles, our social reasons and expectations .... we can't keep 'printing money' to get out of this. .... but that is actually NOT the reason I am referring to .... the Climate Emergency is going to create so much HAVOC in 10-20 ... 30? years .... systems will disintegrate into chaos. .... I've never hoped to be so wrong in my life! ... don't criticize me now, ... just wait 10 years (please).
I took my CPP early and will take OAS at 65. I also intend to use my TFSA as income between 65-70 to qualify for GIS. Very legal and I will sleep like a baby!
Take it as early as you can. If you're lucky then you would live to say 80 years old but the last few years will be spent being a shell of your former self if you're not bedridden or have some sort of disease. Enjoy your life while you can and take it the first opportunity that you can. My father literally passed away less in a week ago and he was 77. He did not enjoy his retirement for long. So get out there and enjoy your retirement.
I opted for OAS at age 65, and concerned with #5 - wary of the government changing rules. Trimming social programs. It was once considered to combine OAS with the GIS, and make the GIS a higher income support for low income seniors. I wouldn't put it past a future government to reconsider this. The OAS clawback income threshold could effectively be REDUCED. I opted to defer CPP to age 70, since that is a contributory program and I don't expect any clawback of this (I could be wrong, though....) Once RRIF's and CPP are regular, I expect most OAS would be clawed back, I don't expect it as any part of my retirement income stream.
I wasn’t thinking the implications when I income split last year .. $$ were clawed back, I did not realize it threw me in a higher bracket 🥴. Won’t do that again this year!
Great over view with simple facts. Really good considerations that most have no idea. Unfortunately there are those that finance is not in their wheellhouse others are obsessed (me) So great to share this and bring attention to options and ideas. Cheers
it is very much like millionaires not paying income taxes - using the system. avoidance vs. evasion. ... i don't agree with the GIS part though. Definitely not the 'spririt' of the invention.
I did the math on this- delaying CPP, delaying RRIF to 70, using TFSA and GIS. Taxwise, it did not work out. My RRSP would expand, but my personal income was out of kilter. Less when younger, more when older, and the taxes eliminated the savings within 5 years of RRIF. Plus a giant tax on RRIF if dead. And you are right about not being cool. The spirit of GIS is to help the needy. In the future, I can see a wealth test added to the criteria. This would eliminate the TFSA people.
@@tivertontom As long as retirees remain in high valued tax free principal residences, they could claim GIS. And take out reverse mortgages for additional cash flow.
Don’t delay taking CPP either! The survivor benefit is at a maximum 60% of your CPP benefit. Also, you cannot receive a full survivor's pension while also receiving a full retirement pension or disability pension. The combined benefit is not necessarily the sum of the 2 separate benefits.
Bad advice- look at all of your income streams in retirement, decide how best to use OAS and CPP. Delaying OAS and CPP mitigates longevity risk. Take a look at Frederick Vitesse book, Retirement Income for Life. His advice is that 90% of Canadians would be finacially ahead for taking deferrals
I am looking to see if you can provide a quick response to my inquiry. When my wife and I go to collect OAS, can we avoid the clawback by splitting our work defined pension plan. I know the increase in the claw back amount is $90,997 in 2024. But between our CPP, OAS, RRSP, and our company defined pension plan, we are coming close to the clawback level. If we do not slip our company defined pension, we will definitely hit the clawback level. Can we actually split our CDPP to avoid the OAS clawback?
My thought is, if I need it when I’m 65, I will take it. If I don’t need it, I will wait. I’d rather have more later if/when I need it. If I die before that, it’s fine as I didn’t need it anyway.
An issue that is not talked about that I wish I had known. The OAS clawback is based on the last year of tax filing. I turned 65 in Dec of 22 , retired 6 months before. My OAS clawback was on 2021 income, the highest of my career . 2022 taxes filed in April but OAS clawback recalculated summer of 23. That was 6 months of clawback which would have been a 3.6% increase for the rest of my life at no cost. It is worse if your birthday is earlier in the year.
As a 70 year old, this is a topic of discussion amongst my friends. People would be more willing to consider it, if the lost OAS was compensated for with the death of a spouse. If I collected no OAS ages 65-69 and die at 69, my spouse would be out all those missed payments ages 65-69 and not benefit from the increased OAS as I would be dead. Some sort of minimum payout for the spouse of say 50% for 10 years might be enough incentive - assuming they are also still alive.
Any change is transitioned so that the soon to be retired are not affected. I would vote for a lower clawback threshold, and a steeper one- say clawback at 60k and done by 80 k.
Hello, you said that after 65 you will receive OAS automatically. I am 67, I lived in Canada over 40 years, that means I should be entitled to the full amount. I never informed CRA to delay it. Does that mean that I lost it? Should I contact CRA now to make sure? Thank you.
You definitely should contact service Canada. ASAP. It’s usually automatic. But there can be reasons why it wouldn’t start automatically. But just contact them and they’ll sort you out.
At age 65 I will only have 30 years of living in Canada, and my wife 32. Our Birthdays are in November, so we could start receiving OAS in the following December. However, because when we arrived in Canada it was January, if we delay starting OAS by two months (now starting in the February), we can choose to add one extra year to our total years, giving us a bigger boost than choosing that the two months be considered a delay. The boost is minor, and will take approximately five years to reach the breakeven point. If I don't have this right, I'd welcome being corrected.
@@wellbuiltwealth Also i'm just finishing my llqp after doing the csc and cph last year so I enjoy these points of views. We get a variety of directions from people in the industry regarding OAS, so your view is one that I would side with. I wonder over time if my opinion will change as I deal with clients, but time will tell.
In my wife’s case she got a letter from the govt stating that if she wanted OAS at 65 she had to apply for it. Worked for us as we were going to delay it and draw RRSP now and avoid the clawback. Not sure why she had to apply vs automatically get it as you stated in your video
I actually called in, to confirm that it will NOT start automatically. The forms sent to me and the website info is 'ambiguous' possibly even 'contradictory'
Not sure why she has to apply as she has been paying taxes since she got out of school but works for us as we will be deferring to avoid clawback while she draws down her RRSP
I heard that progressively our government is delaying OAS from 65 to 67 years old. You can’t hear about this on the news, but can you please confirm this? Many thanks.
@@wellbuiltwealth that was a while ago and now I heard from my 65 years old friend who said he’s not getting OAS till next year according to CRA, there are progressively switching to 67 years of age.
Delaying CPP to 70 and taking OAS at 65 is a nice trade off. OAS is funded through general revenues so is definitely at risk, especially if Skippy takes office. Harper attempted the same thing.
I'm willing to risk "Skippy" over the massive failure of Liberal corruption we're currently experiencing. General revenue no longer exists. All the money Trudeau gives away is now debt spending. We're broke. If Trudeau is again elected to be PM and continues his unsustainable spending, you'll be lucky to get anything as this country sinks into 3rd world status. If Trudeau hadn't spent us into oblivion, this would not even be a discussion.
i have more confidence in CPP funding, however we are hitting peak boomer retirement now. I'm not convinced that any gov't can keep up these OAS payments for decades ahead. (see my comment above)
The nr 5 would be a real reason to collect OAS ASAP, with UBI on the horizon which by the way most people have no clue about and can we really trust the government?????
A major factor that most of these videos do not seem to take into considerations are income taxes & the various credits offered by Federal & Provincial governments. On the surface everyone thinks that delaying CPP as much as you can makes sense - but this is truly not the case for most of us. Came across a video recently, the example has $20k of revenue(RRSP or other) + OAS($800@60 / $1200@65 / $1840@70) + CPP and for someone single in QC. Results, if you die at 75 best option is to take CPP at 60, if you die at 80 or 85 best option is to take CPP at 65 and if you die after best option if to take CPP at 70. Bottom line, you really need to consult someone that knows what they are doing(not your banker) so that they can plugin YOUR numbers and advise you as to when would be best to take your CPP.
