Canada’s retirement system includes two key components: the Canada Pension Plan (CPP) and Old Age Security (OAS). Together, these provide a vital source of income for many seniors, forming the foundation of retirement planning.
But how much can you expect to receive if you’re eligible for both? Let’s break down the potential combined benefits from CPP and OAS in 2024.
Understanding CPP and OAS
The Canada Pension Plan (CPP) is a contributory, earnings-related pension plan that provides monthly benefits to eligible retirees.
The amount you receive depends on your contributions during your working years, your earnings history, and the age at which you start receiving benefits.
On the other hand, Old Age Security (OAS) is a non-contributory pension that provides a basic income to seniors aged 65 and older, funded through general tax revenues.
Maximum CPP and OAS Payments in 2024
CPP Benefits
As of 2024, the maximum monthly amount you can receive from CPP if you begin collecting at age 65 is approximately $1,306.57. However, most new beneficiaries receive less, averaging around $772.71 per month.
If you delay taking CPP until age 70, your monthly benefit can increase significantly, potentially exceeding the standard maximum.
In addition, CPP offers a post-retirement benefit, which allows you to continue contributing to the CPP even after you begin receiving your pension if you keep working.
For 2023, this post-retirement benefit can add up to $40.25 per month to your pension. The maximum combined amount for those receiving both a retirement and survivor’s pension can be up to $1,313.13 per month.
OAS Benefits
For OAS, the maximum monthly payment in 2024 is $707.68 for individuals aged 65 to 74. For those 75 and older, the maximum increases to $778.45 per month.
It’s worth noting that OAS payments can be supplemented by the Guaranteed Income Supplement (GIS) if your income is low, providing additional financial support.
Combining CPP and OAS
If you are eligible for both CPP and OAS, your total potential monthly income can be quite substantial. Assuming you receive the maximum CPP and OAS benefits, here’s what you could expect:
- Age 65-74: $1,306.57 (CPP) + $707.68 (OAS) = $2,014.25 per month.
- Age 75 and older: $1,306.57 (CPP) + $778.45 (OAS) = $2,085.02 per month.
Keep in mind that these figures represent the maximum possible amounts. Your actual benefit will vary depending on factors like your work history, contributions, and when you start receiving your pension.
Factors Affecting Your Benefits
Age of Retirement
One of the most significant factors influencing your CPP benefits is the age at which you choose to start receiving them. Starting early (before age 65) can reduce your payments, while delaying until age 70 can increase them by up to 42%.
Earnings and Contributions
The amount you receive from CPP is based on your contributions throughout your working life. Higher earnings and consistent contributions will result in higher benefits.
Post-Retirement Contributions
If you continue working while receiving CPP, you can make additional contributions to increase your retirement income through the post-retirement benefit.
OAS Clawback
For high-income seniors, the OAS pension is subject to a recovery tax (clawback). In 2024, if your income exceeds $81,761, you’ll need to repay part of your OAS benefits. The repayment amount is 15% of your income over the threshold, potentially reducing your OAS to zero if your income is high enough.
Delaying OAS
You can delay your OAS payments until age 70, which increases your monthly benefit by 0.6% for each month you defer. However, delaying beyond age 70 offers no additional benefit.
In 2024, the combined CPP and OAS benefits can provide a significant income for Canadian retirees. However, the amount you receive will depend on various factors, including your contributions, retirement age, and overall income.
Careful planning and consideration of your financial situation can help you maximize these benefits and ensure a comfortable retirement.
FAQs
What is the maximum CPP payment in 2024?
The maximum monthly CPP payment at age 65 is $1,306.57.
How much OAS will I get at age 70?
At age 70, you can receive up to $778.45 per month.
Can I receive both CPP and OAS?
Yes, you can receive both, potentially totaling over $2,000 per month.
What affects my CPP payment amount?
Your CPP payment depends on your contributions, earnings, and the age you start receiving it.
Is OAS affected by income?
Yes, if your income exceeds $81,761, you may have to repay part of your OAS benefits.
