Do you have to retire at 70 in Canada? The Law and Your Options

As of 2020, the labour force participation rate of Canadians aged 65 and older had more than doubled since 2000, illustrating a clear trend toward working longer. This growing reality raises an important question: do you have to retire at 70 in Canada, or is working into your later years a personal choice?

Quick Summary

Mandatory retirement is largely a thing of the past in Canada, meaning you can continue to work past 70, with few exceptions. The age you stop working, however, significantly influences how much you receive from Canada Pension Plan (CPP) and Old Age Security (OAS) government benefits.

Key Points

• No Mandatory Retirement Age: For most Canadians, retirement at 70 is not mandatory, as the practice has been largely abolished by law.

• Maximize CPP with Delay: Waiting until age 70 to collect Canada Pension Plan (CPP) benefits can result in a 42% permanent increase in your monthly payments.

• Maximize OAS with Delay: Deferring your Old Age Security (OAS) pension until age 70 increases your monthly benefit by 36%.

• Bona Fide Occupational Requirements (BFOR): Certain safety-sensitive professions, like pilots and firefighters, are among the limited exceptions where mandatory retirement may still apply.

• Work while Claiming Pension: If you are under 70 and already receiving a CPP pension, you can continue to contribute and increase your benefit through the Post-Retirement Benefit (PRB).

• OAS Clawback: Be mindful of the OAS recovery tax if you work past 65 and have a high annual income, as it can reduce or eliminate your OAS benefits.

• Financial and Health Considerations: The decision to work longer should factor in your health, lifestyle aspirations, and financial situation to determine the optimal timing for your retirement.

Mandatory Retirement Is Not the Law of the Land

In Canada, federally mandated retirement has been largely eliminated through provincial legislation, meaning employers generally cannot force most workers to retire based on age alone. This shift was influenced by human rights legislation.

The Legal Exceptions

Despite the general rule, some limited exceptions exist for safety-sensitive professions under a "bona fide occupational requirement" (BFOR). These exceptions require employers to prove that age is a necessary factor for safety and efficiency. Examples include:

• Airline Pilots
• Federal Judges
• Firefighters (in some cases)

For the majority of Canadians, the decision of when to retire is personal and based on factors like finances, health, and lifestyle.

Maximizing Your Government Pensions: CPP and OAS

Working longer, potentially until age 70, can be a way to increase government pension benefits. Both the Canada Pension Plan (CPP) and Old Age Security (OAS) offer incentives for delaying the start of payments. The standard age to begin CPP is 65, but you can start between 60 and 70, with starting later resulting in increased monthly payments. Starting between 66 and 70 results in a permanent increase of 0.7% per month, up to a maximum of 42% at age 70. OAS is available to those 65 and older who meet residency requirements and can be deferred up to age 70 for a higher monthly amount. Each month you defer OAS past 65 increases your payment by 0.6%, for a maximum 36% increase at age 70. If you are working between 60 and 70 and receiving your CPP, continued contributions will earn you a Post-Retirement Benefit (PRB), which increases your lifetime monthly pension amount. Deciding when to retire involves considering financial, health, and personal factors. Understanding how delaying these benefits can increase your monthly income can help make an informed decision.

The CPP Post-Retirement Benefit (PRB)

If you are working between 60 and 70 and receiving your CPP, continued contributions will earn you a PRB, which increases your lifetime monthly pension amount.

Making Your Retirement Decision

Deciding when to retire involves considering financial, health, and personal factors. Delaying retirement to 70 to maximize pensions is one strategy. Here's a comparison:

Consideration	Starting Benefits at 65	Delaying Benefits to 70
Monthly Pension	Lower monthly payments, may not keep up with inflation over time.	Significantly higher monthly payments, offering more financial security.
Lifestyle	Can enjoy retirement earlier, with potentially fewer working years, but may have a tighter budget.	Can enjoy a more robust retirement lifestyle later, with potentially more savings and a larger pension.
Health	Access benefits while potentially in better health, allowing for more active years.	Delays access to funds, which may be needed for healthcare as one ages, but can be a strategy for those in excellent health.
Taxes	May fall into a lower tax bracket if you stop working, reducing overall tax burden.	Continued income from working can lead to higher tax brackets, and OAS can be 'clawed back' if income is too high.

Beyond Age 70: A New Chapter

Working past 70 can provide more than just financial benefits; it can also offer mental and social engagement. Many older Canadians are pursuing non-traditional work, such as:

• Part-time work
• Consulting or freelancing
• Entrepreneurship

Staying active through work or other pursuits can be part of a healthy aging strategy. For more details on retirement benefits, visit the official {Link: Government of Canada website https://www.canada.ca/en/services/benefits/publicpensions.html}.

Conclusion: Your Age, Your Choice

Canada has largely abolished mandatory retirement, giving most individuals the freedom to choose when to stop working. The decision of whether to retire at 65, 70, or later significantly impacts your CPP and OAS benefits. By understanding how delaying these benefits can increase your monthly income, you can make an informed decision aligned with your personal circumstances and goals.

Frequently Asked Questions

Is mandatory retirement illegal in Canada?

Yes, for the vast majority of employees. Mandatory retirement was largely banned in Canada through human rights legislation, meaning employers generally cannot force an employee to retire based on age alone.

Are there any jobs that still have a mandatory retirement age in Canada?

Yes, for certain occupations where age is a 'bona fide occupational requirement,' mandatory retirement can still be enforced. This typically applies to safety-sensitive roles like airline pilots or judges.

How much more do I get if I delay my CPP until age 70?

If you delay starting your CPP until age 70, your monthly payments will increase by 0.7% for each month you wait past age 65, up to a maximum of 42%.

What happens if I work past 70 while collecting CPP?

There is no additional increase for delaying your CPP past age 70. However, if you worked between 60 and 70 and contributed to the plan while receiving benefits, you would have earned the Post-Retirement Benefit (PRB).

Will working past 65 reduce my Old Age Security (OAS) pension?

Working past 65 does not automatically reduce your OAS pension, but a high annual income can trigger the OAS recovery tax, or 'clawback.' If your net income exceeds a government-set threshold, your OAS benefits will be reduced.

Can my employer force me to keep working if I want to retire?

No. Just as an employer cannot force you to retire, they also cannot force you to keep working once you decide to retire. The choice to retire is yours, not theirs.

What is the Post-Retirement Benefit (PRB)?

The PRB is an additional, lifetime monthly benefit that increases your CPP pension. You earn it if you continue working and contributing to CPP while receiving your pension between the ages of 60 and 70.