Many Canadians approaching retirement assume they should start collecting Canada Pension Plan (CPP) and Old Age Security (OAS) benefits as soon as they become eligible. After all, why leave money on the table?

However, for Ontario retirees with substantial investment portfolios, claiming government benefits early is often not the most financially efficient strategy. In fact, delaying CPP and OAS to age 70 can significantly increase guaranteed lifetime income, reduce longevity risk, improve tax planning opportunities, and create a more resilient retirement income strategy.

The challenge is that there is no one-size-fits-all answer. The right decision depends on your health, family history, tax situation, investment assets, spending needs, and estate goals.

If you have accumulated more than $500,000 in investments, delaying government benefits deserves serious consideration.

Understanding CPP and OAS Timing

Canada Pension Plan (CPP)

CPP can begin as early as age 60 or as late as age 70.

For each month you delay CPP after age 65, your benefit increases by 0.7%.

This translates to:

For example, if your CPP entitlement at age 65 is $1,200 per month:

That increase is guaranteed, indexed to inflation, and lasts for life.

Old Age Security (OAS)

OAS can begin between ages 65 and 70.

For each month you delay after age 65, your benefit increases by 0.6%.

This translates to:

If your OAS entitlement at age 65 is $800 per month:

Like CPP, OAS is indexed to inflation and backed by the federal government.

Why Wealthier Retirees Should Think Differently

For many Canadians, retirement income planning revolves around replacing employment income immediately.

But households with $500,000, $1 million, or several million dollars invested have a different challenge.

The question is not:

"How do I maximize income today?"

The better question is:

"How do I maximize after-tax lifetime income while minimizing future risks?"

Investors with larger portfolios often have the flexibility to fund retirement spending from their own assets during their 60s, allowing government benefits to grow.

In essence, they are using part of their portfolio to purchase a larger inflation-protected pension from the government.

This can be one of the most attractive risk-adjusted opportunities available in retirement planning.

The Longevity Risk Most Retirees Underestimate

One of the biggest threats to retirement success is not market volatility.

It is living longer than expected.

A healthy 65-year-old Ontario couple has a high probability that at least one spouse will live into their 90s.

Many retirement projections underestimate:

A larger CPP and OAS benefit acts as longevity insurance.

Every dollar of guaranteed lifetime income reduces the amount that must be generated from investments.

For retirees concerned about running out of money, delaying benefits can be one of the most effective risk-management tools available.

The Tax Planning Opportunity Between Retirement and Age 70

Many higher-net-worth retirees experience a temporary low-income period between retirement and age 70.

Consider this common scenario:

During these years, taxable income may be significantly lower than it will be later in retirement.

This creates a valuable planning window.

Strategic RRSP Withdrawals

Many retirees enter their 70s with large RRSP balances.

At age 71, RRSPs must convert to RRIFs.

Mandatory RRIF withdrawals begin at age 72 and can create substantial taxable income.

The consequences may include:

By delaying CPP and OAS while strategically withdrawing from RRSPs during your 60s, you may:

This strategy often produces better long-term outcomes than collecting CPP and OAS early.

Delaying Benefits Can Improve Portfolio Sustainability

Many retirees hesitate to delay because they dislike withdrawing from investments.

This reaction is understandable but often counterproductive.

Consider two retirees:

Retiree A

Retiree B

At first glance, Retiree A appears more conservative.

However, by age 80 or 85, Retiree B may have a stronger retirement income position because more spending is covered by guaranteed inflation-adjusted income.

This reduces dependence on portfolio performance later in life when market downturns can be especially damaging.

The Hidden Value of Inflation Protection

Inflation has become a major concern for retirees.

Many private pensions are not fully indexed.

Investment portfolios can help offset inflation, but returns are never guaranteed.

CPP and OAS provide valuable inflation protection.

When benefits are delayed:

This can become increasingly valuable over a retirement lasting 25 to 35 years.

OAS Clawback Considerations

For affluent retirees, OAS recovery tax (commonly called the OAS clawback) deserves careful attention.

When income exceeds annual government thresholds, OAS benefits begin to be reduced.

Large RRIF withdrawals, investment income, rental income, and pension income can trigger clawbacks.

Strategic planning during your 60s can help mitigate this risk.

Potential strategies include:

In some situations, delaying OAS still makes sense despite future clawback concerns because the larger benefit can offset part of the recovery tax.

Each case requires individual analysis.

When Delaying to Age 70 Often Makes Sense

While every situation is unique, delaying CPP and OAS is often attractive when:

You Have Significant Investments

If your portfolio exceeds $500,000 and can comfortably support spending needs during your 60s, delaying benefits becomes much easier.

You Have Good Health

The longer you live, the greater the value of enhanced lifetime benefits.

Individuals with strong health and family longevity histories frequently benefit from delaying.

You Want More Guaranteed Income

Many retirees prefer reducing reliance on market returns later in life.

Larger government pensions can provide greater peace of mind.

You Are Concerned About Future Taxes

Delaying benefits may create opportunities for proactive tax planning before age 70.

You Have a Younger Spouse

Enhanced survivor benefits and improved household retirement security may support delaying strategies.

When Taking Benefits Earlier May Be Appropriate

Delaying is not always optimal.

Situations where earlier benefits may make sense include:

Serious Health Concerns

If life expectancy is significantly reduced, collecting earlier may be preferable.

Immediate Income Needs

Some retirees simply need the cash flow.

Very Small Investment Portfolios

Individuals with limited savings may not have the flexibility to delay.

Personal Preferences

Some retirees value receiving benefits earlier regardless of long-term projections.

Retirement planning should support your goals, not merely maximize a spreadsheet outcome.

The Break-Even Analysis Isn't the Whole Story

Many articles focus exclusively on break-even ages.

For example:

"If you delay CPP until age 70, you'll break even around age 80."

While mathematically accurate, this analysis is incomplete.

The decision is not merely about total dollars received.

It is about:

These factors often have greater financial value than the break-even calculation alone.

A Real-World Example

Consider an Ontario couple:

If they immediately begin CPP and OAS:

Alternatively, they could:

In many planning scenarios, the second approach produces stronger long-term outcomes.

The Bottom Line

For Ontario retirees with investment portfolios exceeding $500,000, delaying CPP and OAS to age 70 is often one of the most valuable retirement planning opportunities available.

The strategy can:

However, the optimal decision depends on your specific circumstances, including your health, spending goals, tax situation, family dynamics, and estate objectives.

The choice of when to start CPP and OAS should never be made in isolation. It should be coordinated with your investment strategy, RRSP and RRIF planning, tax projections, and long-term retirement income plan.

A comprehensive retirement plan can help determine whether delaying government benefits aligns with your overall financial objectives and creates the greatest after-tax value for your family.

Let us help you with optimizing your CPP and OAS decisions. 

Making a decision on when to start CPP and OAS is one of few retirement decisions which will have a significant impact on your retirement. Our financial advisory team specializes in tax-smart retirement planning for Ontario residents aged 50 and older. We can work with you to understand your full tax picture, model different sale timings, and coordinate with your CPA or estate planning attorney as needed. Check if we are a fit for your personal situation.