If you are a senior citizen in Canada, you may be wondering how the Old Age Security (OAS) increase in 2024 will affect your income and retirement planning. The OAS is a monthly payment that you can receive from the government if you are 65 or older and meet the eligibility criteria. The OAS is indexed to inflation, which means it is adjusted every three months to reflect the changes in the cost of living. The OAS is also enhanced by a 10% increase for seniors aged 75 and over, starting from July 2022. In this article, we will explain what the OAS increase in 2024 means for you, how much you could receive, and how to apply and keep your payments updated. We will also share some tips on how to optimize your OAS benefits and improve your financial situation.
What is the OAS increase in 2024?
The OAS increase in 2024 is the result of two factors: the inflation indexing and the CPP enhancement. The inflation indexing is the regular adjustment of the OAS payment amount based on the Consumer Price Index (CPI), which measures the changes in the prices of goods and services. The CPI is calculated by Statistics Canada every month and reflects the average price changes of a basket of items that Canadians typically buy, such as food, clothing, housing, transportation, health care, and education¹. The OAS payment amount is reviewed every January, April, July, and October to reflect the changes in the CPI. If the CPI goes up, the OAS payment amount goes up. If the CPI goes down, the OAS payment amount stays the same².
The CPP enhancement is the gradual increase of the Canada Pension Plan (CPP) contributions and benefits that started in 2019 and will continue until 2025. The CPP enhancement aims to provide more retirement income for Canadians by increasing the amount of earnings that are covered by the CPP and the amount of benefits that are paid out. The CPP enhancement affects the OAS payment amount because the OAS is subject to a recovery tax, also known as a clawback, if your individual net annual income is higher than a certain threshold. The CPP enhancement increases your CPP income, which may push your net income above the threshold and reduce your OAS payment amount³.
According to the latest estimates from the federal government, the OAS increase in 2024 will be 4.7%, which means the maximum monthly OAS payment amount will go up from $707.68 in 2023 to $740.76 in 2024 for seniors aged 65 to 74, and from $778.45 in 2023 to $814.62 in 2024 for seniors aged 75 and over. However, these estimates are based on the projected CPI and CPP contribution rates, which may change depending on the economic conditions and the actual inflation rate. Therefore, the actual OAS increase in 2024 may be different from the estimated one.
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How much OAS could you receive in 2024?
The amount of OAS you could receive in 2024 depends on your age, your income, and your residency. To be eligible for the OAS, you must be 65 or older, live in Canada, and have lived in Canada for at least 10 years after the age of 18. If you live outside Canada, you must have lived in Canada for at least 20 years after the age of 18. If you meet these criteria, you can receive the full OAS pension, which is the maximum monthly payment amount. If you have lived in Canada for less than 40 years after the age of 18, you can receive a partial OAS pension, which is a percentage of the full OAS pension based on the number of years you have lived in Canada. For example, if you have lived in Canada for 25 years after the age of 18, you can receive 25/40 or 62.5% of the full OAS pension².
The table below shows the estimated maximum monthly OAS payment amounts for 2024 based on your age and the projected OAS increase of 4.7%:
| Age | Maximum monthly OAS payment amount |
| 65 to 74 | $740.76 |
| 75 and over | $814.62 |
However, your actual OAS payment amount may be lower than the maximum amount if your income is higher than the net world income threshold set for the year. The net world income is your total income from all sources, both inside and outside Canada, minus certain deductions, such as your CPP or QPP contributions, your RRSP deductions, and your union dues. If your net world income is higher than the threshold, you will have to repay part or all of your OAS pension. This is called the OAS recovery tax or clawback. The table below shows the estimated net world income thresholds and the OAS recovery tax rates for 2024 based on the projected OAS increase of 4.7%:
| Age | Net world income threshold | OAS recovery tax rate |
| 65 to 74 | $81,761 | 15% of the excess income |
| 75 and over | $87,331 | 15% of the excess income |
For example, if you are 68 years old and your net world income in 2024 is $90,000, you will have to repay 15% of the difference between your income and the threshold, which is ($90,000 – $81,761) x 0.15 = $1,235.85. This means your annual OAS payment amount will be reduced by $1,235.85, or your monthly OAS payment amount will be reduced by $102.99. Therefore, instead of receiving the maximum monthly OAS payment amount of $740.76, you will receive $637.77.
How to apply for and keep your OAS payments updated?
If you are eligible for the OAS, you can apply online or by mail. To apply online, you need to have a My Service Canada Account (MSCA). If you do not have one, you can register for one. You will need your Social Insurance Number (SIN), information about your spouse or common-law partner if you have one, your banking information, and the date you want your payments to start. To apply by mail, you need to fill out the Application for the OAS and the GIS (ISP-3550) form and include certified true copies of the required documents. You can mail the application to Service Canada or bring it in person to a Service Canada office.
In some cases, you do not have to apply for the OAS. Service Canada will automatically review your eligibility and send you a letter to let you know if you qualify. This will happen if you are already receiving the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP) and you file your income tax return by April 30 each year. You will receive the letter the month after you turn 64.
You also need to keep your OAS payments updated by reporting your income and any changes in your situation to Service Canada every year. Your OAS payments are reviewed every July based on your income from the previous year. You need to report your income and deductions to Service Canada every year to ensure you receive the correct amount of OAS. The easiest way to do this is to file your income tax return by April 30 each year. Service Canada will use the information from your tax return to calculate your OAS payments. If you do not file your tax return, you will receive a letter from Service Canada asking you to provide your income information. You can do this online through your MSCA or by mail using the form included in the letter.
You also need to inform Service Canada of any changes in your situation that may affect your OAS eligibility or amount. These changes include:
- Changes in your marital status, such as getting married, divorced, separated, or widowed
- Changes in your spouse or common-law partner’s status, such as receiving the OAS pension, the Allowance, or the Allowance for the Survivor
- Changes in your residence, such as moving to another province or country
- Changes in your income or deductions, such as starting or stopping a job, receiving a pension, or making RRSP withdrawals
You can report these changes online through your MSCA, by phone, or by mail. You should report these changes as soon as possible to avoid overpayments or underpayments of your OAS.
How to optimize your OAS benefits and improve your financial situation?
The OAS is a valuable benefit that can help you improve your financial situation as a senior citizen in Canada. However, there are some things you can do to optimize your OAS benefits and avoid losing them. Here are some tips:
- File your income tax return every year, even if you do not have any income. This will ensure you receive the correct amount of OAS and other benefits, such as the GST/HST credit and the Canada Workers Benefit.
- Plan your income and expenses carefully. Some types of income, such as employment income, pension income, RRSP withdrawals, and investment income, can reduce your OAS amount. Some types of expenses, such as medical expenses, charitable donations, and RRSP contributions, can increase your OAS amount. You can use the OAS calculator to estimate how different income and expense scenarios can affect your OAS amount.
- Consider deferring your OAS pension. If you are eligible for the OAS pension but do not need it right away, you can defer it for up to 5 years. This will increase your OAS pension amount by 0.6% for every month you delay it, up to a maximum of 36%. This can also increase your OAS amount, as your OAS pension is not counted as income for the OAS. However, this option may not be suitable for everyone, as it depends on your life expectancy, income, and tax situation. You should consult a financial planner before making this decision.
- Explore other sources of income and support. The OAS is not the only benefit available for senior citizens in Canada. You may also qualify for other federal, provincial, or municipal programs that can help you with your living costs, such as the Guaranteed Income Supplement (GIS), the Allowance, the Allowance for the Survivor, the Canada Pension Plan (CPP), the Quebec Pension Plan (QPP), the Age Credit, the Pension Income Credit, the GST/HST Credit, the Canada Workers Benefit, and various housing, energy, health, and social assistance benefits. You can use the Benefits Finder tool to find out what other benefits you may be eligible for.
Conclusion
The OAS increase in 2024 is the result of two factors: the inflation indexing and the CPP enhancement. The OAS increase in 2024 will be 4.7%, which means the maximum monthly OAS payment amount will go up from $707.68 in 2023 to $740.76 in 2024 for seniors aged 65 to 74, and from $778.45 in 2023 to $814.62 in 2024 for seniors aged 75 and over. However, these estimates are based on the projected CPI and CPP contribution rates, which may change depending on the economic conditions and the actual inflation rate. Therefore, the actual OAS increase in 2024 may be different from the estimated one.
The amount of OAS you could receive in 2024 depends on your age, your income, and your residency. You can receive the full OAS pension if you are 65 or older, live in Canada, and have lived in Canada for at least 40 years after the age of 18. You can receive a partial OAS pension if you have lived in Canada for less than 40 years after the age of 18. However, your OAS payment amount may be lower than the maximum amount if your income is higher than the net world income threshold set for the year. If your income is higher than the threshold, you will have to repay part or all of your OAS pension. This is called the OAS recovery tax or clawback.
You can apply for and keep your OAS payments updated by reporting your income and any changes in your situation to Service Canada every year. You can apply for the OAS online or by mail, or you may be automatically enrolled if you are already receiving the CPP or the QPP and you file your income tax return by April 30 each year. You need to report your income and deductions to Service Canada every year to ensure you receive the correct amount of OAS. You also need to inform Service Canada of any changes in your marital status, your spouse or common-law partner’s status, your residence, your income, or your deductions.
You can also optimize your OAS benefits and improve your financial situation by following some tips, such as filing your income tax return every year, planning your income and expenses carefully, considering deferring your OAS pension, and exploring other sources of income and support. The OAS is one of the ways that the government supports senior citizens in Canada and helps them achieve a better quality of life.
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Source: (1) Old Age Security payment amounts – Canada.ca. https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/payments.html. (2) Old Age Security: How much you could receive – Canada.ca. https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/benefit-amount.html. (3) CPP and OAS Payment Increase 2024. What To Expect. https://canpension.ca/articles/cpp-oas-2024.