#FinancialFridays – Income Changes at 65…

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You may think the government knows it’s your birthday, but you still need to do the paperwork!

When you turn 65, you can receive two types of income from the Canadian Government. And, wow, is it confusing! Read on to learn more about government income options when you turn 65.

***APPLY 6 MONTHS BEFORE YOUR 65th BITHDAY NO MATTER WHAT YOUR INCOME IS!***

No matter what income you receive before you turn 65 (ODSP, OW, CPP-D, Insurance payments, work, etc.), make sure to apply for your Canada Pension Plan and Old Age Security 6 months before you turn 65. The Canadian Government notifies around 17,000 people each month that they will be automatically enrolled for OAS and GIS; This seems like a high number, but do not rely on being one of those 17,000. APPLY!

When you turn 65, you can get two payment each month from the Canadian Government, CPP and OAS.

  • Canada Pension Plan (CPP) – When working, you pay into this pension program through deductions on your paycheques. The amount you get is based on how much and how long you paid into CPP, your average earnings during your working life, and the age when you decided to start your pension.
  • You can start getting CPP payments between the ages of 60 and 70. Most people wait until they are 65.
  • If you are getting OW or ODSP payments, there is no benefit to apply for CPP before you are 65. The CPP income will be deducted from your OW or ODSP income $1 for $1.
  • The transfer from OW or ODSP payments to CPP is not automatic. Make sure you apply for CPP around 6 months before you turn 65.
  • Old Age Security (OAS) – The amount you get for Old Age Security payments is based on the number of years you live in Canada between the ages of 18 years old and 65 years old, to a maximum of 40 years.
    • You can start getting OAS payments the month after your 65th birthday.
    • Make sure to apply 6 months before you turn 65. Don’t wait to see if you are one of the people who are automatically enrolled!
    • Some pensioners may be able to get additional money that is included in their monthly OAS payment.
  • Guaranteed Income Supplement (GIS) – This is an income top-up program from the Canadian Government for seniors whose income is below a certain amount.
    • For single pensioners whose income is less than $21,168 per year and pensioners with a spouse or common-law partner with a combined income less or between $27,984 and $50,736 per year (This is based on your situation. Please see the website link below for more details).
    • On the OAS application, make sure to complete Section C to apply for GIS payments no matter your income amount. This will let the government review your income each year when you do your taxes to verify if you fit the criteria. This is helpful in case your income amount changes or the eligibility amount changes in the future and you become eligible.
    • The government uses your income amount on your income taxes each year to decide if you are going to get GIS income. It is important to do your taxes each year and do them on-time to avoid having this income cut-off or disrupted.
    • The amount you get changes every three months based on a cost of living measurement.
  • Guaranteed Annual Income Systems (GAINS) – This is an income top-up program from the Ontario Government for seniors whose income is below a certain amount.
    • For seniors who receive the OAS pension and GIS payments and…
    • Have an annual private income of up to $1,992 if single or up to $3,984 if you are a senior couple. *Private income may include money from a private pension, CPP, bank interest, etc.
    • If you receive OAS and GIS, you don’t need to apply.
    • When you apply in Section C of the OAS application for GIS, your eligibility for GAINS is automatically checked.
  • The amount you get is supposed to increase your overall income to the Guaranteed Income Level for Seniors. This changes every three months. The next change will be in October 2023.
    • For July to September 2023, the Guaranteed Income Level for Seniors between 65 and 74 is $1,825 per month for single pensioners and $1,409 per month per person for qualified couples.
    • For July to September 2023, the Guaranteed Income Level for Seniors 75 and older is $1,894 per month for single pensioners and $1,479 per month per person for qualified couples.
    • That means your monthly amount from GAINS would be between $2.50 and $83 and is included in your OAS payment.

This is very complex and, for me at least, confusing. Here is an example:

Payment Formula

  • CPP payment + OAS payment (OAS+GIS+GAINS) = Guaranteed Income Level for Seniors

Payment Amounts

  • Assuming someone doesn’t get a CPP payment
    • $0 + ($699+$1,043+$83) = $1,825
  • Assuming someone gets a low CPP payment
    • $80.50 + ($699+$1,043+$2.50) = $1,825

Note: Newcomers need to have lived in Canada for 10 years to collect OAS and GIS.

If you want to talk about any financial issues, please reach out to Caroline at the United Way. 519-378-4773 or advice@unitedwaybg.com

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