Retirement at 65 is Over – Major OAS and CPP Changes Everything In Canada

Updated On: June 29, 2025

Retirement at 65 has long been seen as the standard in Canada—but that standard is shifting fast. With rising life expectancy, economic pressures, and changing government policy, the traditional age of retirement is no longer a fixed line. In 2025, significant updates to Old Age Security (OAS) and the Canada Pension Plan (CPP) are influencing how Canadians plan for retirement—and in many cases, delaying it altogether.

Here’s a breakdown of the latest changes and what they mean for your retirement strategy.

Table of Contents

Why Retirement at 65 is No Longer the Norm

Several factors are contributing to the erosion of 65 as the “official” retirement age:

Longer life expectancy: Canadians are living well into their 80s, meaning retirement funds need to last longer.
Rising cost of living: Inflation, housing, and healthcare costs are pushing many to work longer.
Government incentives: Updates to OAS and CPP are rewarding those who delay retirement past 65.

According to Statistics Canada, nearly 20% of Canadians aged 65 and older are still in the workforce, either full-time or part-time.

Key Changes to OAS and CPP in 2025

The federal government has implemented several updates to OAS and CPP that take effect in 2025, and they’re already reshaping retirement planning.

1. OAS Eligibility and Deferral Incentives

Change	Details
Deferral Bonus	Canadians can now delay OAS payments up to age 75 (previously 70) and receive a larger monthly benefit—up to 48% more than starting at 65.
Income Threshold Adjustments	The OAS clawback (recovery tax) now starts at a higher income threshold, helping middle-income retirees retain more of their benefit.
Automatic Enrollment Tweaks	Automatic enrollment expanded, but those deferring must opt out manually to avoid early payments.

2. CPP Contribution and Payment Updates

Change	Details
Higher Maximum Pensions	CPP enhancements that began in 2019 continue to roll out; maximum CPP payouts are higher in 2025 for those who contributed at the enhanced rates.
Contribution Ceilings Increased	Higher annual earnings limits mean higher contributions—but also higher future benefits.
Delayed CPP Start Still Pays Off	Postponing CPP payments up to age 70 increases benefits by 0.7% per month delayed—an 8.4% annual boost.

Impact on Canadians’ Retirement Plans

With these changes, more Canadians are choosing to:

Work longer to maximize OAS and CPP benefits
Take part-time or contract work past age 65
Delay retirement until 67–70 to improve long-term income stability

This shift means retirement is becoming less of a fixed age and more of a flexible, phased transition.

Should You Delay Retirement?

Whether or not to retire at 65 now depends on:

Your health and personal goals
Your financial preparedness (RRSP, TFSA, private pensions)
Your expected CPP and OAS income

Delaying benefits can significantly increase monthly payments—but it also requires additional years of work or other income to bridge the gap.

Here’s a quick comparison:

Start Age	CPP Monthly Benefit (2025 est.)	OAS Monthly Benefit (2025 est.)
65	$1,364	$713
67	~$1,600	~$810
70	~$1,800+	~$1,050 (with full deferral bonus)

(Estimates based on maximum benefit amounts for individuals who contributed at maximum levels.)

The Bottom Line

Retirement at 65 is no longer a one-size-fits-all milestone. With evolving OAS and CPP policies, Canadians have more flexibility—but also more responsibility—to plan strategically. Whether you choose to retire early, on time, or delay for bigger benefits, understanding the new rules is key to making informed decisions.