Good news for Canadians relying on the Canada Pension Plan (CPP) and Old Age Security (OAS): both programs will see a much-needed increase in December 2024. These boosts come at a critical time, as rising inflation and the cost of living make it harder for seniors and working Canadians to stay financially secure.
If you’re nearing retirement, already receiving benefits, or just interested in understanding how these changes will impact your finances, this guide provides everything you need to know—from eligibility to payment changes and how to maximize your benefits.
What You Need to Know About the 2024 CPP/OAS Increases
| Key Topic | Details |
|---|---|
| CPP Boost | Expected 6-7% increase; the maximum monthly payment will rise to $1,306.57 for those starting at age 65. |
| OAS Boost | Expected 6-7% increase; maximum monthly payment will reach $1,025 for seniors aged 65 and older. |
| Eligibility for CPP | Must have worked in Canada and contributed to the CPP throughout your career. Benefits are based on contributions. |
| Eligibility for OAS | Must be a Canadian citizen or legal resident, and have lived in Canada for at least 10 years after age 18. |
| OAS Clawback | Seniors with annual income over $81,761 may see a reduction in their OAS benefits. |
| Official Website | For full details, eligibility criteria, and payment schedules, visit the official government website. |
The increases in both CPP and OAS are a significant step to help Canadians keep pace with rising living costs. Whether you’re planning for retirement or already receiving benefits, understanding these changes and how to plan for them can help you make the most of your financial future.
Understanding CPP and OAS
Both the Canada Pension Plan (CPP) and Old Age Security (OAS) are crucial parts of Canada’s retirement income system, but they work differently.
Canada Pension Plan (CPP):
The CPP provides retirement, disability, and survivor benefits to those who have contributed throughout their working years. Contributions are deducted from your paychecks, or if you’re self-employed, you contribute both the employee and employer share. Your monthly pension is based on your contributions over the years.
- Starting at Age 65: In 2024, the maximum CPP payment at age 65 is expected to be around $1,306.57.
- Delayed Payments: If you choose to delay receiving your CPP until age 70, your monthly payment will increase by 0.7% for each year you wait, with a potential 42% increase by age 70.
Old Age Security (OAS):
Unlike CPP, OAS is not based on work contributions but on your residency in Canada. It provides a monthly payment to seniors 65 and older, based on how long you’ve lived in the country.
- Eligibility for OAS: To qualify, you must have lived in Canada for at least 10 years after turning 18. To receive the full OAS benefit, you need to have lived in Canada for 40 years after turning 18.
- OAS Payments: In 2024, the maximum OAS payment for those 65 and older will rise to about $1,025 per month.
CPP and OAS Increases for December 2024
Both programs will experience a 6-7% increase in December 2024 to adjust for inflation and the increasing cost of living. Here’s what you can expect:
Canada Pension Plan (CPP) Increase:
- Maximum Payment: The maximum CPP payment for someone starting at age 65 in 2024 will rise to $1,306.57 per month.
- Example: If you were receiving $1,200 a month in 2023, the new amount could increase to around $1,272 per month starting in December 2024 with a 6% boost.
This increase ensures that the value of CPP payments stays aligned with inflation, helping seniors and workers maintain their purchasing power.
Old Age Security (OAS) Increase:
- Maximum OAS Payment: The maximum OAS payment for seniors aged 65 and older is projected to rise to approximately $1,025.
- Example: If you’re currently receiving $950 per month, you can expect an increase of about $57 per month with the 6% boost.
Just like CPP, OAS payments are adjusted annually based on inflation to help seniors manage rising living costs.
OAS Clawback: Understanding the Impact
For higher-income seniors, the OAS clawback may reduce your payments. Here’s how it works:
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- Clawback Threshold: Seniors with an annual income over $81,761 may face a reduction in OAS benefits. If your income exceeds $134,000, your OAS payments will be fully eliminated.
- What Counts as Income: The clawback applies to various forms of income, including pensions, investment earnings, and employment income.
Strategic financial planning can help reduce the impact of the clawback, such as contributing to an RRSP to lower your taxable income.
Eligibility for CPP and OAS
How to Qualify for CPP:
To qualify for CPP, you must have worked in Canada and made contributions throughout your career. You can start receiving CPP as early as age 60, but your monthly payments will be reduced. Full benefits are available starting at age 65.
If you’re unsure of your contributions, you can check your CPP statement online through your My Service Canada Account.
How to Qualify for OAS:
To qualify for OAS, you must be a Canadian citizen or legal resident and have lived in Canada for at least 10 years after age 18. Full benefits are available if you’ve lived in Canada for 40 years after age 18. You can apply for OAS online through your My Service Canada Account, ideally six months before your 65th birthday.
Tips for Maximizing Your CPP and OAS Benefits
To get the most from your CPP and OAS, consider these strategies:
- Delay Your CPP: If possible, delay your CPP until age 70. Each year you wait increases your monthly benefit by 0.7%, leading to a 42% higher monthly payout.
- Maximize Your CPP Contributions: The more you contribute to CPP during your working years, the higher your benefits will be. If you’re self-employed or able to contribute more, it’s worth doing.
- Plan for the OAS Clawback: If your income exceeds $81,761, take steps to reduce the clawback’s impact, such as contributing to an RRSP to lower your taxable income.
- Diversify Your Retirement Savings: While CPP and OAS are essential, they may not cover all of your retirement expenses. Consider additional savings vehicles like RRSPs or TFSAs.
Frequently Asked Questions (FAQs)
1. When will the CPP and OAS increases take effect?
The CPP and OAS increases will be reflected in your December 2024 payment, received in January 2025.
2. How do I apply for OAS?
You can apply for OAS through My Service Canada Account. It’s recommended to apply at least 6 months before your 65th birthday.
3. How much will my OAS increase?
The OAS increase in December 2024 is expected to be 6-7%. For example, if you receive $950 a month, you could see a $57 increase.
4. What is the OAS clawback?
The OAS clawback reduces payments if your income exceeds $81,761. If your income surpasses $134,000, your OAS will be fully eliminated.
By staying informed about the changes to CPP and OAS and making smart financial decisions, you can better prepare for a comfortable retirement.