Most clients take Old Age Security at 65 without thinking twice. It shows up, they take it. But for a growing segment of healthier, still-working, or tax-burdened clients in their mid-60s, deferring OAS to age 70 is one of the highest-return, lowest-risk strategies available, and it's consistently undersold.
Here's why that's a problem, and how to make the case clearly.
The Math Is More Compelling Than Most Clients Realize
OAS increases by 0.6% for every month it's deferred past 65, up to age 70. That's a 36% permanent increase if a client waits the full five years.
In 2026, the maximum monthly OAS at 65 is approximately $727. Defer to 70, and that becomes roughly $988/month, a difference of $261/month, or $3,132/year, for life.
The breakeven point, where total lifetime income from deferring surpasses taking it at 65, typically falls between ages 81 and 83, depending on the client's tax situation. Given that life expectancy for a healthy 65-year-old Canadian now exceeds 86 for women and 83 for men, that breakeven is well within realistic range for most clients.
The Tax Angle Most Advisors Skip
Here's where it gets more interesting: OAS deferral isn't just about income replacement. It's a tax strategy.
For clients who are still working at 65, or drawing down registered accounts, or receiving other pension income, adding OAS can push income above the OAS clawback threshold (approximately $90,997 in 2026). Once net income exceeds that threshold, OAS is recovered at 15 cents per dollar, making every additional dollar of OAS worth only $0.85 before other taxes.
Deferring OAS during high-income years and taking it later, when RRSP withdrawals slow down or employment income drops, means more of it is actually kept.
When Deferral Makes the Most Sense
Deferral is strongest when a client checks one or more of these boxes:
Still working at 65. Adding OAS to employment income will likely trigger partial or full clawback. Waiting until they stop working means they keep more of it.
High RRSP/RRIF balances. Clients who need to draw down large registered accounts in their late 60s may face elevated income during those years. Stacking OAS on top compounds the tax hit.
Good health and family longevity. The longer a client lives, the better deferral performs. A client with a parent who lived to 94 is a strong candidate.
Bridging is feasible. The main objection to deferral is "I need the income." But if a client has non-registered savings, TFSA room, or a partner's income to bridge five years, this objection dissolves quickly. Running a bridge scenario is a five-minute conversation worth having.
When It Doesn't Make Sense
Deferral isn't always right. Clients in poor health, with limited life expectancy, or who genuinely need the cash flow at 65 should not defer. Clients with significant other income may also find the breakeven too distant to matter meaningfully to their plan.
The key is that this should be an active, documented conversation, not a default.
How to Present It in a Client Meeting
The most effective way to make this case is visually: show two lifetime income curves side by side. One takes OAS at 65, one at 70. Mark the breakeven. Mark the client's current life expectancy estimate.
When clients see the crossover point, and realize they likely have 15–20 years past it, the decision usually becomes clear. What was an abstract percentage becomes real money on a chart they can point to.
Tools that run this projection live, in the meeting, dramatically improve both understanding and decision quality. Static PDF decks prepared the night before rarely capture the nuance of a client's actual situation. The ability to adjust assumptions on the fly, health, income, bridge assets, is what separates a compelling recommendation from a generic one.
The Advisor's Role
The OAS deferral decision is one of the clearest examples of where advisor guidance creates measurable, lasting value. A 36% permanent increase in a guaranteed, inflation-indexed government benefit, for a client who doesn't need the income right now, is not a difficult recommendation to defend. What makes it hard is the inertia of the default.
Make the case. Show the math. Let the client decide with full information.
That's the job.
PlanBase models OAS deferral scenarios automatically as part of every retirement projection, including bridge withdrawal strategies and clawback analysis.