If you receive Old Age Security, you are (maybe) getting a raise. Congratulations!
Namely, there’s an Old Age Security (OAS) indexation adjustment, a special $500 one-time payment for “older” seniors and, come 2022, an extra 10% annually for seniors over the age of 75. Let’s take a quick look at what’s new.
The objective of the OAS program is “to ensure a minimum income for seniors and help reduce the incidence of low income among Canada’s seniors.” The OAS benefits include: the OAS pension, which is paid to all individuals aged 65 and older who meet the residence requirements; the Guaranteed Income Supplement (GIS) for low-income seniors; and the Allowances for low-income Canadians aged 60–64 who are the spouses or common-law partners of GIS recipients, or who are widowed or widowers.
In July 2021, OAS benefits were automatically increased by 1.3%. That means the maximum monthly OAS pension amount is now $626.49, up from $618.45. The GIS and the Allowances for lower-income seniors were also adjusted for inflation.
Higher-income seniors, of course, could see some of their OAS clawed back due to the dreaded 15% OAS “recovery tax.” For 2021, OAS is reduced if the senior has net income greater than $79,845 (line 23400 of the personal tax return) and is fully clawed back once income hits $129,581. Because OAS benefits are determined on an individual net income basis, a couple could have an annual household income of up to about $160,000 and still receive their full OAS benefits, or household income as high as about $258,000 and still receive partial OAS.
Most seniors, however, have low and modest incomes, with about 84% of OAS pensioners having individual incomes below $50,000.
Here’s a snapshot of what’s happening:
- In July 2021, OAS benefits were automatically increased by 1.3% for everyone. The new maximum monthly OAS pension amount is now $626.49, up from $618.45.
- During the week of August 16, 2021, “older” seniors will receive a $500 one-time OAS payment.
- The 2021 federal budget also announced a permanent increase of 10% to the OAS pension, starting in July 2022, for seniors aged 75 and over.
- And, remember in 2021, OAS is reduced if the senior has net income greater than $79,845 (line 23400 of the personal tax return) and is fully clawed back once income hits $129,581.
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THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.