Old Age Security is a taxable pension paid out to Canadians that have lived in Canada for 40 years or more after age 18. A pro-rated amount is payable for those that have been residents for less than that amount of time. Old Age Security is a great place to start when we begin layering the sources of income that you will have during your retirement. The maximum monthly amount that can be received at the time of this writing is $533.70. But this social benefit has claws. By that I mean it can be clawed back if your income exceeds a certain amount.
When managing your income during retirement, it becomes important to look at the sources of your income that are taxable. The claws that will reduce your Old Age Security are based on the taxable amount of income that you report. In the case of Old Age Security, once your income exceeds $67,668 for 2011, this benefit will begin to be reduced.
What can be done? If you’re still in the phase of your life before retirement, we can help you determine if you have enough money saved in Tax Free Savings Accounts and other non-registered vehicles that will allow you more control over the amount of taxable income that you’ll receive during retirement. The best retirement planning starts years before you actually retire.
Some things you may want to know about the Old Age Security include the following:
Here is a link to Service Canada’s website for additional information about the OAS.