Retirement Age Moves from 65 - 67
Thursday, September 6, 2012
Canadians who are eligible for Old Age Security (OAS) will have to wait a little longer to reap the benefits of this program if today they are younger than 54. Starting 11 years from now, on April 23, 2023, Canada’s official retirement age will gradually rise from 65 to 67. (Retirement age is not changing for the Canadian Pension Plan.)
The Canadian government hopes this change will encourage citizens to stay in the workforce longer to strengthen the economy, generate tax revenues and reduce the costs of the OAS system by decreasing the number of beneficiaries. Administrators cite the change in workforce demographics as a threat to the financial health of OAS: In the 1970s, seven workers contributed to the plan for every person over 65; 20 years from now, there will be only two. The program pays out longer today for each retired individual as well, since the life span for both men and women continues to rise.
The OAS is available to Canadians who have lived in the country for at least 10 years, and offers additional benefits to low-income seniors, including a Guaranteed Income Supplement (GIS) for OAS pensioners plus an allowance for senior spouses or widowed spouses or common-law partners of pensioners.
How will the April 2023 retirement age change affect you?
If you were born on or after February 1, 1962: You will become eligible for OAS at age 67.
If you were born between April 1, 1958, and January 31, 1962: You will become eligible for OAS sometime between ages 65 and 67, depending on your exact birthdate.
If you were born before April 1, 1958: You will not be affected by the change and will be eligible for OAS when you turn 65.
If you are a spouse or survivor of an OAS pensioner: The age of eligibility for an OAS allowance will increase. If you were born on or after February 1, 1962, you will become eligible at some point between ages 62 and 66; if you were born before February 1, 1962, you will become eligible at some point between ages 60 to 64.
If you voluntarily defer receiving your OAS benefit: (Starting July 1, 2013) You can receive a higher payment. For example, if you defer your payments from age 65 to age 66, you might receive an annual benefit of $6,948 instead of $6,481.
What does the change mean to the futures of retiring Canadians? Lower-income individuals and couples are expected to experience the greatest hardship, since they tend to rely on the OAS most strongly. But anyone under 54 who has planned to rely on the OAS benefit as part of their retirement finances needs to adjust their plans, whether that means working more years, saving more aggressively or both.
Additionally, OAS pensioners who are counting on the benefit to protect their spouses from financial distress in the event of their own deaths should review the death benefit of their life insurance policies to ensure their spouses will have adequate resources.
Sources: The Globe and Mail, Human Resources and Skills Development Canada, The Regina Leader-Post