For decades, turning 65 in Canada was seen as the universal signal to hang up your work boots and begin life as a retiree. That was the milestone when Old Age Security (OAS) kicked in, Canada Pension Plan (CPP) payments often began, and life was expected to slow down.
But in 2025, that picture is shifting dramatically. Longer lifespans, higher living costs, and new government incentives are redefining when—and how—Canadians choose to retire. For many, age 65 is no longer the finish line, but simply a checkpoint along a longer financial journey.
The Changing Face of Retirement
Why 65 No Longer Means “The End”
Retirement at 65 is becoming less of a given and more of a personal choice. Several factors are fueling this shift:
- Life expectancy in Canada now exceeds 82 years, meaning retirees may need to fund 20–30 years of post-work living.
- Rising costs for groceries, housing, and healthcare are stretching savings thin.
- New incentives introduced in 2025 reward those who delay claiming benefits, increasing monthly payouts.
- Around 1 in 5 Canadians over 65 is still working, either to maintain income or simply to stay active.
This evolving landscape means retirement is no longer “one-size-fits-all.” For some, working longer is a financial necessity; for others, it’s a strategic choice to secure a more comfortable future.
2025 Policy Updates – What’s Changed for CPP and OAS
The Canadian government has introduced significant updates to both OAS and CPP in 2025. These changes could alter your decision-making if you’re nearing retirement age.
OAS Changes
| Change | Details |
|---|---|
| Deferral Bonus | You can now defer OAS until age 75, boosting payments by up to 48%. |
| Higher Income Threshold | The income level where OAS begins to be clawed back has been raised, allowing more seniors to keep their full benefit. |
| Automatic Enrollment | Most Canadians are now auto-enrolled in OAS at 65 unless they opt to defer. |
CPP Changes
| Change | Details |
|---|---|
| Higher Payouts | Increased monthly payments in 2025 for those who contributed at maximum rates. |
| Increased Contribution Limit | The ceiling for pensionable earnings has risen, letting you contribute more for future benefits. |
| Delayed Start Incentive | Deferring CPP to age 70 increases payments by 0.7% per month delayed—8.4% per year. |
These policy shifts are designed to reward patience and long-term financial planning. The longer you wait to claim, the more you stand to gain.
How Delaying Retirement Affects Your Income
Delaying benefits by just a few years can have a significant impact on your monthly income. Here’s an estimate based on 2025 rates:
| Start Age | CPP Monthly | OAS Monthly |
|---|---|---|
| 65 | \$1,364 | \$713 |
| 67 | ~\$1,600 | ~\$810 |
| 70 | \$1,800+ | ~\$1,050 |
Over a decade or more, these differences add up to tens of thousands of extra dollars—potentially enough to make a big difference in retirement comfort.
The Real-World Impact on Canadians
Many Canadians are adapting their retirement plans in response to these changes:
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- Working longer into their late 60s or early 70s to maximize benefits.
- Phasing into retirement through part-time work or consulting instead of stopping abruptly.
- Using RRSPs, TFSAs, or workplace pensions to bridge the gap before starting CPP or OAS.
For example, someone retiring at 65 with modest savings might have just enough for daily needs, but delaying until 70 could mean an extra \$500–\$700 per month—money that could cover travel, better housing, or healthcare costs.
Should You Delay Retirement? Key Questions to Ask
Delaying isn’t right for everyone. Before making a decision, consider:
- Health – Are you physically and mentally able to keep working?
- Savings – Can your RRSP, TFSA, or other investments sustain you until benefits start?
- Job flexibility – Can you work part-time or in a less demanding role?
- Income needs – How much do you require monthly to maintain your lifestyle?
If you can afford to wait, the long-term financial payoff could outweigh the short-term delay.
Retirement Planning Tips for 2025 and Beyond
- Check your benefit estimates through your Service Canada account.
- Use retirement calculators to model income at 65, 67, and 70.
- Evaluate your savings to see if you can cover the gap before benefits.
- Consider hybrid retirement—working part-time while collecting partial income from investments.
- Consult a financial advisor to customize your plan based on these new rules.
The Bottom Line – Retirement Is Now on Your Terms
The traditional retirement age of 65 is no longer a strict rule. In fact, for many Canadians, it’s becoming the exception rather than the standard. With 2025’s CPP and OAS updates, you have more flexibility than ever to choose a retirement timeline that suits your health, finances, and lifestyle goals.
Whether you stop working at 65, delay until 70, or transition gradually, the key is informed planning—because the decisions you make now will shape your financial security for decades to come.
5 FAQs
Q1: What is the new maximum age to defer OAS?
You can now defer OAS until age 75, earning up to a 48% increase in monthly payments.
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Q2: How much does CPP increase if delayed after 65?
CPP grows by 0.7% per month delayed—equal to 8.4% per year—up to age 70.
Q3: Can I work and collect CPP at 65?
Yes, you can continue working and receive CPP payments simultaneously.
Q4: Is retiring at 65 still common in Canada?
It’s less common now, with more Canadians working past 65 or retiring gradually.
Q5: Has the OAS clawback changed in 2025?
Yes, the income threshold where OAS begins to be clawed back is now higher, allowing more seniors to retain full benefits.