Federal retirement income benefits at 65
When you turn 65, you become eligible for two key federal benefits: the Canada Pension Plan (CPP) and Old Age Security (OAS). A third benefit, the Guaranteed Income Supplement (GIS), is available to low-income OAS recipients.
Canada Pension Plan (CPP) retirement pension
- Eligibility: To receive the CPP retirement pension, you must be at least 60 years old and have made at least one valid contribution to the plan.
- How it works: The amount you receive depends on your contributions over your working life and the age you start collecting it. While 65 is the standard age, you can start early at 60 with a permanently reduced benefit (up to a 36% reduction) or defer it until 70 for a permanently increased benefit (up to a 42% increase).
- How to apply: You must apply for the CPP retirement pension through your My Service Canada account, either online or with a paper form.
- Important note: If you are already receiving a CPP disability benefit, your payments will automatically convert to a retirement pension at age 65.
Old Age Security (OAS) pension
- Eligibility: Unlike CPP, OAS is not based on your work history. You must be 65 or older and meet Canadian residency requirements. Specifically, you need to have lived in Canada for at least 10 years after turning 18 if you reside in Canada when you apply.
- How it works: The OAS pension is a monthly, taxable benefit funded by general tax revenues. The maximum amount is subject to an income recovery tax, often called a "clawback," if your net income exceeds a certain threshold. You can also defer your OAS payments up to age 70 for a permanent increase.
- How to apply: In many cases, Service Canada will automatically enroll you based on your tax filings. However, if you do not receive a notification letter the month after you turn 64, you may need to apply.
Guaranteed Income Supplement (GIS)
- Eligibility: The GIS is a non-taxable, monthly benefit for low-income seniors who receive the OAS pension and live in Canada. Your eligibility and the amount you receive are based on your annual income (or combined income for couples).
- How it works: The GIS is reviewed annually based on your income tax return. It is not payable if you are outside of Canada for more than six months.
- How to apply: You can apply at the same time as you apply for OAS. Filing your tax return annually is crucial for automatic renewal.
Provincial and territorial healthcare coverage for seniors
While Canada's universal healthcare (Medicare) covers medically necessary doctor's visits and hospital stays, it does not cover everything. The specifics of supplementary coverage for seniors vary significantly by province and territory. Key areas often requiring additional coverage include prescription drugs, dental care, vision care, and paramedical services.
Prescription drug coverage
Most provinces offer programs to help seniors with prescription drug costs, but the details differ:
- Ontario: Seniors aged 65 and over are automatically covered by the Ontario Drug Benefit (ODB) program. A deductible and co-payments may apply based on income, with a Seniors Co-Payment Program available for lower-income seniors.
- Alberta: The Coverage for Seniors program provides premium-free coverage for prescriptions and other health-related services not covered by the standard Alberta Health Care Insurance Plan. A co-payment may be required.
- Prince Edward Island: The Seniors' Drug Program automatically enrolls residents 65 and older with a PEI Health Card. A co-payment is charged per prescription.
Dental and vision care
Routine dental and vision care are generally not covered by provincial Medicare plans and often require private insurance or a specific government program.
- Federal Canadian Dental Care Plan (CDCP): Launched in 2024, the CDCP provides coverage for eligible Canadian residents with an adjusted family net income of less than $90,000. The plan was rolled out in phases, starting with seniors.
- Provincial Programs: Some provinces offer dental and optical assistance for low-income seniors. For example, Alberta has a Dental and Optical Assistance for Seniors program, and Ontario has the Seniors Dental Care Program for eligible low-income individuals.
Comparison of federal vs. supplementary coverage
| Feature | Federal Coverage (CPP/OAS/GIS) | Supplementary Coverage (Provincial/Private) |
|---|---|---|
| Funding Source | Tax-based and contributor-based funding. | Varies by program: tax-based for provincial senior plans; premium-based for private insurance. |
| Scope | Retirement income replacement, with additional support for low-income seniors. | Extended health benefits, such as prescriptions, dental, vision, hearing aids, and paramedical services. |
| Eligibility at 65 | Based on age, residency, and contribution history (for CPP) or income (for GIS). | Based on age, residency, and sometimes income for provincial plans, or health status for private insurance. |
| Application Process | CPP and OAS require application (though OAS can be automatic) via Service Canada. GIS requires annual tax filing. | Varies by program; some are automatic, others require an application. Private insurance is purchased directly. |
| Key Consideration | Maximizing income by strategically choosing when to start payments (e.g., deferring OAS). | Bridging gaps in provincial healthcare and managing out-of-pocket costs. |
Private insurance and employer benefits
Many Canadians rely on a mix of government and private coverage to ensure all their healthcare needs are met in retirement. Private insurance is essential for covering items like outpatient prescription drugs, paramedical services, and dental care. Some employers offer the option to convert group benefits to a personal plan within a limited timeframe after retirement, which can be a valuable option. It is recommended to evaluate your provincial program's offerings and any available private plans to identify potential gaps.
Preparing for retirement at 65
Transitioning into retirement at 65 involves coordinating several different benefits. The first step is to understand your eligibility for federal and provincial programs. Next, assess any gaps in coverage for expenses not covered by government plans. Private health insurance or converted employer benefits can fill these gaps. Planning ahead ensures a smoother transition and maximizes your retirement income. For more information on federal benefits, visit Service Canada's official website.
Conclusion
Turning 65 in Canada provides access to core federal retirement benefits through the Canada Pension Plan and Old Age Security, with the possibility of the Guaranteed Income Supplement for low-income individuals. However, relying solely on government coverage leaves significant gaps in healthcare, particularly for prescription drugs, dental, and vision care. By combining federal benefits with provincial programs and supplemental private insurance, Canadian seniors can secure more comprehensive coverage and enjoy their retirement with greater peace of mind.
