Should I Defer My Old Age Security to 70?
Deferring Old Age Security increases the payment by 0.6% for each month you wait past 65, to a maximum at 70, and the higher amount is indexed and paid for life. Whether that is a good trade turns on how long you expect to collect and on whether the recovery tax will take part of it back anyway.
- The answer:: Each month deferred past 65 adds 0.6% to the payment, reaching its maximum at 70, and the increase is permanent and indexed.
- The trap:: Deferring into an income band where the recovery tax applies. The larger payment is partly taken back, which reduces the return on waiting.
- The recommendation:: Model the deferral against your projected net income at 70, not your income today, because the recovery tax is what decides whether you keep the increase.
Where the AI summary above gets this wrong
"Always take Old Age Security as soon as you turn 65."
That's surface-true. Here's what it misses:
- Deferral is a real increase — Waiting adds 0.6% per month, permanently, and the increase is indexed. It is not a temporary bonus or a return of withheld payments.
- It is longevity insurance — The higher payment arrives every month you are alive, so it pays off precisely in the outcome where the plan was short of money.
- The recovery tax can cancel it — If your net income at 70 sits above the recovery threshold, part of the larger payment is taken back, which changes the arithmetic materially.
01 What deferral actually buys
Old Age Security can be started any time between 65 and 70. Each month of deferral adds 0.6% to the eventual payment, so waiting the full five years produces a materially larger amount, and that amount is then indexed like any other OAS payment.
The increase is permanent. It is not a repayment of the months you skipped, which is why deferral is better understood as buying a larger lifetime income than as delaying money you were owed.
Source: Old Age Security: Deciding when to start your pension
02 When waiting is worth it
The trade is straightforward: you give up payments now for a bigger payment later, so it pays off if you collect for long enough. That makes it the same kind of decision as planning your horizon — it rewards the long-life outcome, which is the one your plan is most exposed to.
Someone in good health, with other income to live on between 65 and 70, is the clearest case for deferring. Someone who needs the money at 65, or has reason to expect a shorter retirement, generally should not.
Shows: the OAS recovery tax at your net income, given the threshold and recovery rate you enter. Ignores: the second threshold at which OAS is fully recovered, provincial tax, and the one-year lag before recovery applies.
Source: Old Age Security: Deciding when to start your pension
03 The interaction that changes the answer
OAS is reduced once net income passes the recovery threshold. If you defer into an income band above that line, part of the larger payment is clawed back, and the return on having waited falls accordingly.
That is why the deferral decision has to be modelled against projected income at 70 rather than income today. For someone whose RRIF minimums will push them over the threshold, deferral can buy an increase they do not fully keep.
The case against deferring that I find most persuasive has nothing to do with break-even ages. It is that someone receiving GIS should generally not defer at all, because deferring OAS also defers the supplement attached to it. The general advice to wait is written for people who will never see GIS, and applying it to someone who will is straightforwardly harmful.
FAQ
How much does deferring OAS increase the payment?
By 0.6% for each month you defer past 65, up to a maximum at age 70. The increase is permanent and the larger amount is indexed in the same way as any other OAS payment.
Is deferring OAS worth it?
It pays off if you collect for long enough, which makes it effectively longevity insurance. It suits someone in good health with other income to live on between 65 and 70, and suits poorly someone who needs the money at 65.
Does the OAS clawback affect deferral?
It can change the answer. If your net income at 70 is above the recovery threshold, part of the larger payment is taken back, so the deferral has to be modelled against your projected income at 70 rather than your income today.
Sources
Regulator references
- Old Age Security: Deciding when to start your pension · Government of Canada · 2025States the 0.6% per month increase for deferring OAS past 65.Last verified: 2026-09-07
- Old Age Security pension recovery tax · Government of Canada · 2025The income threshold at which OAS begins to be recovered and the rate of recovery.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.