Deferring OAS to age 70: 36% enhancement 2026

The 36% enhancement explained

OAS offers an enhancement of 0.6% per month for each month of deferral after age 65, or 7.2% per year. At age 70, which is 60 months after the normal age, the enhancement reaches 36% (0.6% x 60 months). This increase is permanent and indexed quarterly based on the Consumer Price Index.

In 2026, the maximum OAS at age 65 is $743.00/month ($8,916/year). With the 36% enhancement, the amount at 70 reaches approximately $1,010/month ($12,120/year). That is a difference of $267/month, or $3,204 more per year, for the rest of the client's life.

Deferral is flexible. The client can start OAS at any time between 65 and 70. At 66, the enhancement would be 7.2%. At 67, 14.4%. At 68, 21.6%. At 69, 28.8%. Each additional month of deferral adds 0.6% more.

Who should defer OAS to age 70

Deferral is particularly advantageous for clients whose net income at age 65 exceeds the clawback threshold of $90,997 in 2026. These clients would lose part or all of their OAS to the clawback. Deferring to 70 avoids this loss and provides an enhanced amount when income decreases.

Clients in good health with other income sources between 65 and 70 are also good candidates. Those receiving an employer pension plan, RRSP/RRIF, or investment income can easily cover their expenses without OAS for 5 years.

Conversely, deferral is not recommended for low-income clients who might qualify for the Guaranteed Income Supplement (GIS). GIS is not available if OAS is deferred, because receiving OAS is a prerequisite for GIS eligibility.

Break-even analysis: age 65 vs 70

The break-even point between claiming OAS at 65 and deferring to 70 falls around ages 82-83 (similar to QPP). Using the maximum amount in 2026:

Starting at 65: the client receives $743/month. At 75 (10 years), they have accumulated approximately $89,160 in cumulative payments. At 80, approximately $133,740. At 85, approximately $178,320.

Starting at 70: the client receives nothing for 5 years. They begin receiving $1,010/month. At 75 (5 years of payments), approximately $60,600. At 80, approximately $121,200. At 83, approximately $145,440. The crossover occurs around ages 82-83.

However, if the client would have lost part of their OAS to the clawback between 65 and 70, the break-even point is reached much earlier, often by ages 75-77. Deferral is then almost always advantageous for high-income clients.

The 10% bonus at age 75 and over

Since July 2022, the federal government pays an automatic 10% increase to OAS for beneficiaries aged 75 and over. In 2026, the maximum OAS for those 75+ is approximately $817.36/month (without deferral).

A client who deferred OAS to 70 (+36%) and who reaches 75 benefits from both enhancements. Their OAS would be approximately $1,010/month plus the 75+ bonus (applied to the base amount). This total amount constitutes a substantial and fully indexed guaranteed income.

The clawback threshold for those 75+ is the same as for those aged 65-74 ($90,997 in 2026). High-income clients aged 75+ are therefore even more likely to face the clawback, making avoidance strategies all the more important.

Complementary strategies

OAS deferral is often combined with other strategies for maximum effect. The RRSP meltdown between ages 65 and 72 reduces the RRSP balance before mandatory RRIF withdrawals, while providing income during the years OAS is deferred.

Pension income splitting with a spouse can also bring individual income below the clawback threshold after 70, allowing the client to receive the enhanced OAS without clawback. The TFSA is an ideal complementary tool because its withdrawals do not affect net income.

The optimal combination depends on the client's overall situation: RRSP balance, employer plan, investment income, spouse's situation, and health. The advisor must analyze the complete picture before recommending deferral.

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