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.
Feel free to reach out to me and book a free 15 minute zoom or phone call if you would like to find out more.
With Gratitude,
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