Should I work past 70 while collecting CPP and OAS?

This article was originally published by MoneySense.

Q: I turned 67 in February of 2016. I still work full time and my yearly income is about $96,000 annually. I also collect a survivor benefit of $389 per month and have contributed to CPP for 14 years. I would like to delay collecting CPP and OAS until 70 but can I still work after age 70 while I’m still collecting CPP and OAS? What would be the pros and cons of working past 70 while collecting CPP and OAS.

—Marie M.

A: If you plan in any case to work until age 67 or 70, then that’s probably when you should start collecting your CPP. You can use the tool at cppoptimizer.com to make an exact calculation, one that factors in some variables you’ve not specified such as: presence or absence of an employer pension plan, RRSP or TFSA savings to date, non-registered investments and whether you have prospects of working part-time once you cease full-time work. But generally speaking, the later you can wait to collect CPP, the better, and this applies double in your case because you’ve only contributed to the plan for 14 years so far. You’d have been penalized for taking CPP early at 60, and waiting until 70 would almost double your benefits. Keep in mind too that CPP is inflation-indexed and if you lack an inflation-indexed corporate pension, the bigger your CPP benefits obtained by deferring it, and the more you’ll have the peace of mind of an inflation-indexed pension. Deferring Old Age Security (OAS) until age 70 will also pay out more the longer you wait. (For each month of “valid” deferral, your OAS pension will be increased by 0.6%.) Depending on your RRSP levels (if any) and prospects of OAS clawbacks after age 71, you might opt to defer CPP until 70 or whatever age you retire, but take OAS as soon as it’s available at age 65.

Jonathan Chevreau is MoneySense’s Retired Money columnist and founder of the Financial Independence Hub.