Boost Your OAS to $990 Per Month – Know How Delaying Until Age 70 Can Benefit You

Canada’s Old Age Security (OAS) program serves as a cornerstone of financial support for seniors. This universal pension provides monthly payments to citizens and legal residents aged 65 and older, regardless of income level. Here’s an in-depth look at OAS and how Canadian seniors can maximize their retirement income through smart financial planning.

Overview

The OAS program provides a monthly pension that starts automatically for most eligible individuals upon reaching age 65. For the first quarter of 2025, the maximum OAS monthly payment is $727.67, equating to an annual total of $8,732.04. These payments are indexed to inflation, ensuring they maintain purchasing power over time.

If Service Canada lacks sufficient information to enroll an individual automatically, eligible recipients must apply to start receiving payments.

Benefits

While OAS payments are invaluable, deferring them can significantly enhance their value. Seniors have the option to delay receiving OAS payments for up to five years, until age 70. For each month of deferral, payments increase by 0.6%, or 7.2% annually.

Deferring OAS to age 70 results in a 36% permanent increase in monthly payments, raising the amount to $990 per month (rounded from $989.63). This equates to an additional $3,143.53 annually, making it a viable option for individuals in good health or those who don’t need immediate financial support.

Retirement Income

While OAS offers a stable foundation, it may not cover all retirement expenses. Pairing OAS with the Canada Pension Plan (CPP) and income from savings accounts like Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) can significantly bolster financial security.

Investing in dividend stocks through a TFSA is a particularly effective way to generate tax-free passive income. One compelling option is Diversified Royalty Corp (TSX:DIV).

Example

• Share Price: $2.96
• Dividend Yield: 8.44%
• Potential Annual Income: A $7,000 TFSA investment can generate $590.80 annually or approximately $49.23 monthly in tax-free dividends.

Why Diversified Royalty Corp?
The company derives royalties from trusted brands like Mr. Lube and AIR MILES, offering consistent dividends since its inception in 2014. This reliability makes it an attractive option for income-focused retirees.

Investing for Growth

For retirees seeking capital appreciation alongside dividend income, Aecon Group (TSX:ARE) is a solid choice. Aecon operates in construction and engineering, industries poised for growth as infrastructure projects expand.

Example

• Share Price: $27.05
• One-Year Price Return: +112.74%
• Dividend Yield: 2.81%

With a $6 billion project backlog as of Q3 2024, Aecon offers steady revenue growth, making it a promising investment for retirees looking to diversify their portfolios.

Balanced Retirement Plan

To achieve financial stability in retirement, seniors should combine multiple strategies:

1. Optimize OAS: Consider deferring payments for higher long-term benefits.
2. Maximize Savings Accounts: Use TFSAs and RRSPs to build tax-advantaged retirement income.
3. Invest Wisely: Choose reliable dividend stocks like Diversified Royalty Corp for passive income and growth-oriented companies like Aecon Group for capital appreciation.

By blending these approaches, retirees can create a well-rounded plan to ensure a secure and comfortable retirement.

The OAS program remains a critical safety net for Canadian seniors. While the payments alone may not suffice for all financial needs, strategies like deferring benefits and leveraging investments through TFSAs and RRSPs can make a significant difference. Smart planning today lays the foundation for a financially stable and fulfilling retirement.

FAQs