Say Goodbye to 65: Canada’s New OAS & CPP Rules Are Changing Retirement Forever: It was once the dream of every Canadian to retire at 65 and live out the rest of their lives in comfort. That dream included closing the laptop, leaving the office for the last time and never checking emails again. But now the picture is changing. In today’s era, 65 years is no longer a fixed retirement age, but it has become a flexible goal. Increasing life expectancy, rising inflation and changes in pension plans have given a new direction to retirement. Let’s know how the meaning of retirement is changing in 2025 and beyond.
Why was 65 the magic number for retirement?
Around mid-20 th century, it was sensible to retire after the age of 65. Back in those days the average life expectancy of people was number of years less, the jobs were more labour oriented and pension schemes were also structured around a 10-15 year retirement. Now however the case.
Today, the average Canadian lives 80 to 85 years, and in much better health than before, according to Statistics Canada. This means retirement can now be as long as 25–30 years longer—a sort of second stage of life.
Living without a regular income for such a long period of time requires a lot of financial planning. Plus, the rising cost of housing, groceries, healthcare and other basic necessities has left many wondering if quitting work at just 65 is really the right move.
Pension plans and math
The Canadian government has provisions in plans like the CPP (Canada Pension Plan) and OAS (Old Age Security) that make retiring late attractive. For example:
- CPP: You can start taking it at age 60, but there will be a 0.6% deduction every month.
- OAS: It starts at 65, but if you delay it until 70, you get an extra 0.6% per month in benefits.
If someone takes CPP at 60, they will get 36% less in benefits, while waiting until 70 will result in a 42% higher payout—and it will be for life.
This is a very personal decision, though. If someone has health problems or has a low life expectancy in their family, it may make sense to take benefits early. But if you are healthy and have a long life expectancy, it makes more financial sense to delay.
Why are Canadians working longer?
In 2000, only 10% of Canadians over 65 were working. Today, that number has risen to about 20%. It’s not just about the need for money. Many people also value the social aspect, routine, and mental activity of work.
In addition, there is a growing trend of phased retirement—where people work part-time, consult or pursue projects of their choice rather than quitting their job altogether. This not only brings in some extra income, but also provides an opportunity to stay mentally and socially active.
Could the retirement age be raised?
In 2012, a proposal by the Canadian government to increase OAS-eligibility to 67 was withdrawn in 2016 as a result of popular outcry. Nevertheless, the economic strains do not go away. The decline in the number of working people as well as pension expenditures has ensured the remote possibility of this decision being realized in the future. The retirement age has already been lifted in nations like the US and the UK and this is likely to be duplicated in Canada should monetary demands become more intense.
The real question is not “When to retire?”, but “Can you afford retirement?”
There are three major factors that everyone should consider when deciding the right time to retire:
- Savings: Will your savings (RRSP, TFSA and other investments) adequately provide you with the necessary income to live the next 2030 years comfortably?
- Pension Timing: Would you prefer to claim CPP and OAS sooner, at age or forgo later?
- Lifestyle Expectations: Would you like a low key life or would you like a life of travel, hobby and luxury?
Conclusion
The conventional dream of a retirement at the age of 65 no longer exists. Today, retirement has become a personal matter of planning, financial and lifestyle choice. In future, it will become even more flexible-where people will work not just to acquire financial means, but to have a quality life, personal objectives and the willingness to stay active in society.
When you are mentally and financially ready, then retirement is the correct time.
FAQs
Q1. Is 65 still the standard retirement age in Canada?
No, 65 is no longer a fixed retirement age. Many Canadians now choose to work longer due to increased life expectancy and financial needs.
Q2. What happens if I take CPP early at 60?
Taking CPP at 60 reduces your monthly benefit by about 36% compared to waiting until 65.
Q3. Can I increase my OAS by delaying it?
Yes, delaying OAS until age 70 can increase your benefit by up to 36%.
Q4. Why are more Canadians working past 65?
Rising costs, longer lifespans, and the desire to stay active and social are key reasons people continue working beyond 65.
Q5. Could the retirement age in Canada increase in the future?
It’s possible. While a previous plan to raise OAS to 67 was reversed, financial pressures could lead to similar proposals again.