Can I Work While Receiving Old Age Security?
Yes. Old Age Security has no earnings test, so employment income does not disqualify you or reduce the payment directly. It does count toward net income, which is what the recovery tax is applied to, so above the threshold each dollar earned carries both tax and clawed-back benefit.
- The answer:: OAS is not reduced because you work. Nothing about employment affects eligibility or the payment amount directly.
- The trap:: Ignoring the recovery tax. Employment income raises net income, and above the threshold OAS is recovered on top of ordinary tax on the same dollars.
- The recommendation:: Where income sits near the threshold, consider whether deferring OAS or shifting income between years leaves you better off.
Where the AI summary above gets this wrong
"If you keep working after 65 you will lose your Old Age Security."
That's surface-true. Here's what it misses:
- There is no earnings test — OAS eligibility is based on age and residence, not on whether you work. Employment does not disqualify you.
- Income matters, employment does not — What triggers the recovery tax is net income above a threshold, whatever its source. A pension dollar and a salary dollar count identically.
- The combined rate is the real number — Above the threshold, an extra dollar costs ordinary tax plus recovered benefit, which is a materially higher effective rate than the bracket alone.
01 Why working does not disqualify you
Old Age Security is based on age and years of residence in Canada, not on employment. There is no earnings test of the kind some other countries apply, so continuing to work has no direct effect on eligibility or on the payment.
What working does is add to net income, and net income is the figure the recovery tax is measured against. The effect is indirect but real, and it applies identically whether the income is salary, pension or investment income.
02 The combined marginal cost
Above the recovery threshold, each additional dollar of income is taxed at your marginal rate and also causes part of your OAS to be recovered. The two together produce an effective rate well above the posted bracket.
That figure is the one to use when deciding whether an extra contract or a few more months of work is worth it. The calculator shows what the recovery alone takes at a given income.
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.
03 What you can do about it
Deferring OAS is the cleanest response for someone still working at 65 with income above the threshold: you avoid receiving a benefit that would be partly recovered, and the deferral increases the eventual payment.
Shifting income between years also helps where it can be controlled — timing a bonus, a capital gain or a RRIF withdrawal into a lower-income year keeps more of the benefit intact.
Contributing to an RRSP is the other lever, and it remains available to the end of the year you turn seventy-one. A deduction reduces net income directly, which is the figure the recovery tax is calculated on, so a contribution made while still earning does double duty in exactly these years.
Source: CPP post-retirement benefit
The question people actually ask is whether the extra work is worth it, and the honest answer needs the combined rate rather than the bracket. I have seen someone take a contract believing they kept two thirds of it and keep closer to half once the recovery was counted. That is not an argument against working — it is an argument for knowing the real number before agreeing a fee.
FAQ
Does working reduce my Old Age Security?
Not directly. OAS depends on age and years of residence, with no earnings test. Employment income does raise net income, which is what the recovery tax is applied to, so the effect is indirect.
What is my real marginal rate above the threshold?
Ordinary tax plus the recovered portion of OAS on the same dollars, which is materially higher than the posted bracket. That combined figure is the one to use when deciding whether extra work is worthwhile.
Should I defer OAS if I am still working?
Often yes, if your income is above the recovery threshold. Deferring avoids receiving a benefit that would be partly clawed back and increases the eventual payment for each month you wait, to a maximum at 70.
Sources
Regulator references
- 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
- CPP post-retirement benefit · Government of Canada · 2025How contributions made while receiving CPP create an additional lifetime benefit.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.