Say Goodbye to Retiring at 65-The New Age For Collecting OAS and CPP Changes Everything In Canada

For decades, age 65 has been enshrined in the Canadian social consciousness as the landmark when citizens “retire” and begin collecting their Canada Pension Plan (CPP) and Old Age Security (OAS) benefits. But changing demographics,

fiscal pressures, and evolving social policy are pushing Canada toward a new paradigm: delaying the standard pension age to 67 (or beyond) for many future retirees. In this blog post, we’ll explore why retiring at 65 is being reconsidered, how the rules for OAS and CPP are shifting, what this means for planning your retirement, and strategies to adapt to this new retirement horizon.

Say Goodbye to Retiring at 65- Overview

Why the Shift? Pressures Behind Raising the Pension Age

1. Longer Life Expectancy and Aging Population

Canadians are living longer. Advances in healthcare, better nutrition, and improved living conditions mean more people are reaching older ages in relatively good health. While increased longevity is positive, it also means more years drawing on pension systems, putting pressure on sustainability.

2. Fiscal Sustainability and Pension System Solvency

Public pension systems especially those that are partially pay-as-you-go—face strain when the ratio of working contributors to retirees declines. To preserve the financial health of OAS and CPP, raising the eligibility age helps reduce future liabilities and delays payments, lightening immediate fiscal burdens.

3. Changing Labor Market & Workforce Trends

In many cases, people are healthier and able to work longer. Moreover, with the shifting nature of work (less physically demanding roles, more service/knowledge work) many individuals may wish or be able to stay active in the workforce beyond age 65. Pushing the pension age aligns policy with these labor market realities.

4. Political and Generational Equity

Delaying pension ages spreads the burden more evenly among generations, so younger taxpayers aren’t overwhelmed by pension commitments for older cohorts. It also encourages individuals to save more privately or stay in the labor force longer.

What Are OAS and CPP — A Quick Refresher

Before diving into changes, it’s useful to recap how Canada’s major retirement income pillars work.

• Canada Pension Plan (CPP): A contributory, earnings-based plan. Most working Canadians contribute through payroll deductions, and benefits are based on contributions and years of work. You may begin collecting CPP as early as age 60 (at a reduced amount) or delay up to 70 (for a higher benefit).
• Old Age Security (OAS): A non-contributory, residence-based benefit funded out of general tax revenue. In addition to the base OAS pension, there’s the Guaranteed Income Supplement (GIS) for low-income seniors. The standard eligible age today is 65.

The Proposed Change: From 65 to 67 — What We Know

Who It Affects & Timeline

Under the proposals circulating in 2025, individuals born after 1960 may have to wait until age 67 to begin collecting OAS and possibly CPP. Those already collecting these benefits would be “grandfathered in” — that is, their benefits would not be cut or delayed if already receiving them.

In short: current seniors and those already in the system would not lose out, but new applicants would face new thresholds.

CPP Impacts

• The earliest you can draw CPP is still projected to remain at age 60 (with actuarial reduction).
• The maximum benefit (by delaying up to age 70) would likely remain possible.
• The change primarily shifts the standard age for full CPP (i.e. when reductions or enhancements don’t apply) to a later point.

OAS Impacts

• The standard eligibility for full OAS would move from 65 to 67 for new applicants.
• The GIS, which is tied to OAS, would similarly “trigger” later for many low-income seniors.

Transitional & Phasing Rules

To ease the transition, incremental approaches may be adopted e.g. for individuals born in certain years (e.g. 1960–1965) the eligibility might slide gradually rather than an abrupt jump. Governments often adopt phased rollouts to reduce disruption and allow planning time.

Implications for Retirement Planning

Delay in Benefit Start = More Working Years

One direct effect: many individuals will need to stay in the workforce longer to bridge the income gap before benefits kick in. This raises questions for those in physically demanding jobs or those who prefer early retirement.

More Private Saving, More Emphasis on Personal Investment

With delayed public benefits, personal savings (RRSPs, TFSAs, workplace defined-benefit or defined-contribution pensions) become even more critical. People will need to boost savings earlier and for a longer period to fill the gap between retirement and benefit eligibility.

The “Cliff Gap” Risk

Consider someone who wants to retire at 65 but under new rules must wait until 67 to collect OAS/CPP. That two-year gap can be financially precarious unless they have substantial nest egg or alternative income.

Impact on Lower-Income or Vulnerable Workers

Those with lower earnings, intermittent work histories, or health challenges may struggle. These groups may have less ability to continue working, so delayed benefits could hit them harder. Policy designers must consider protections for them.

Reassessing Retirement Goals & Lifestyle

The notion of “retirement” may shift from stopping work entirely to reducing work or moving to part-time work. Some individuals may adopt phased retirement, bridge employment, or entrepreneurial paths between 65 and 67.

Final Thoughts

The shift from retiring at 65 to a new standard closer to 67 (for CPP and OAS eligibility) is not just a bureaucratic tweak; it is a structural change reflecting demographic realities, fiscal responsibility, and evolving retirement lifestyles. While it presents challenges especially for those in vulnerable situations or with limited capacity to continue working it also pushes individuals and institutions to rethink how we plan for, fund, and live our later years.