For decades, Canadians grew up with the idea that age 65 marked the end of working life. It was the moment when pensions kicked in, work stopped, and a new chapter began. But in 2025, that long-standing tradition is fading fast.

Longer lifespans, rising living costs, and a new wave of government policy changes mean the traditional retirement age is no longer the gold standard. Instead, many Canadians are delaying retirement—sometimes by choice, often by necessity.

With major updates to the Canada Pension Plan (CPP) and Old Age Security (OAS) rolling out this year, Canadians are being encouraged to rethink when and how they step away from the workforce. These changes could significantly affect monthly payouts, retirement planning, and financial stability.

Why the Retirement Shift Is Happening

Retiring at 65 used to be a safe bet, but today the numbers tell a different story.

• Life expectancy in Canada now exceeds 82 years, meaning retirees may need to fund 20–30 years of living expenses.
• Rising costs—from housing and groceries to healthcare—are draining retirement savings faster than before.
• Government incentives introduced in 2025 reward those who delay retirement, offering higher payouts for patience.
• Workplace realities show that nearly 1 in 5 Canadians over 65 are still employed, some out of financial necessity, others for personal fulfillment.

In short, retirement is no longer a one-size-fits-all decision. For many, it has become a flexible process rather than a fixed date.

2025 Updates to OAS: What You Need to Know

The Old Age Security program has undergone significant reforms this year, making it more flexible and rewarding for Canadians who choose to delay.

Change	Details
Deferral Bonus	Canadians can now delay OAS until age 75, increasing monthly payments by up to 48%.
Higher Income Threshold	The income level for the OAS clawback has been raised, allowing more seniors to keep full payments.
Automatic Enrollment	Most Canadians are now auto-enrolled at 65. To delay, individuals must actively opt out.

These changes are designed to encourage longer workforce participation while ensuring that those who delay are compensated with higher lifelong benefits.

2025 Updates to CPP: Bigger Rewards for Waiting

The Canada Pension Plan is also seeing substantial updates in 2025. These adjustments are aimed at strengthening retirement security for Canadians who maximize contributions or wait before drawing benefits.

Change	Details
Higher Payouts	Those who contributed at the maximum rate will see larger monthly payments.
Raised Contribution Limit	Pensionable earnings caps have been increased, enabling higher contributions for future benefits.
Delayed Start Incentive	Waiting until age 70 raises CPP payments by 0.7% per month delayed (8.4% per year).

The message is clear: patience pays. Canadians who can afford to wait could see hundreds more per month in retirement income.

How the New Rules Affect Canadians

What does all of this mean in practice? Simply put, your retirement age could dramatically influence your monthly income.

Here’s an illustration of potential benefit amounts:

Start Age	CPP Monthly (Est.)	OAS Monthly (Est.)
65	\$1,364	\$713
67	~\$1,600	~\$810
70	~\$1,800+	~\$1,050

Delaying retirement by just a few years could add hundreds of dollars each month, which adds up to tens of thousands of dollars over time.

As a result, many Canadians are continuing to work into their late 60s and 70s, or choosing to ease into retirement through part-time or freelance work.

Should You Delay Retirement?

Whether delaying makes sense depends on your personal circumstances. Here are the key questions to consider:

• Health: Are you physically able to keep working past 65?
• Savings: Do you have enough in RRSPs, TFSAs, or workplace pensions to cover early years without CPP/OAS?
• Employment options: Can you continue working part-time or transition into less demanding roles?
• Income trade-off: How much would you gain by waiting until 67 or 70 versus starting at 65?

For healthy Canadians with strong savings, delaying may lead to greater long-term security. But for those with health concerns or limited assets, claiming earlier might be the safer choice.

Practical Tips for Canadians Approaching Retirement

With the retirement landscape changing, careful planning is more important than ever. Experts recommend taking the following steps:

1. Check your CPP and OAS projections using your Service Canada account.
2. Use retirement calculators to compare income at different ages (65, 67, 70, or 75 for OAS).
3. Review your savings strategy and consider whether RRSPs or TFSAs can bridge the gap if you delay.
4. Explore part-time or gig work to supplement income during transitional years.
5. Consult a financial advisor to personalize your retirement plan.

The bottom line: flexibility is your greatest asset. Retirement no longer has to be an abrupt stop at 65—it can be a gradual process shaped by personal and financial goals.

Why the Government Pushed These Changes

The 2025 reforms are rooted in both economic necessity and demographic realities.

• Longer life expectancy: With Canadians living longer, pensions need to stretch further.
• Affordability crisis: Rising costs of living have made fixed retirement incomes less sustainable.
• Fiscal responsibility: Encouraging later retirement helps reduce strain on federal pension programs.
• Labour market needs: An aging population means retaining older workers helps address labour shortages.

The government frames these updates as giving Canadians “more choice and control” over their retirement, while critics argue it may pressure seniors to work longer than they would prefer.

Criticism and Concerns

While many see the new rules as positive, they are not without controversy.

• Equity concerns: Not all Canadians can delay. Those in physically demanding jobs may not be able to work until 70.
• Financial gaps: People with limited savings may be forced to take lower benefits earlier, widening inequality.
• Clarity issues: Automatic enrollment for OAS could confuse those who want to delay but forget to opt out.

Advocates argue that alongside pension reform, Canada must also invest in healthcare, eldercare, and workplace flexibility to ensure older Canadians are supported.

The Future of Retirement in Canada

The traditional retirement age of 65 is fading into history. For many Canadians, retirement is becoming a phased, individualized process rather than a single date.

• Some will still retire at 65, relying on CPP, OAS, and savings.
• Others will delay to 70 or even 75 to maximize government benefits.
• Many will adopt a hybrid retirement, balancing part-time work with pensions.

As these changes take root, Canadians now have more financial incentives to delay—but also more responsibility to plan carefully.

Conclusion: Retiring on Your Own Terms

Canada’s retirement system is undergoing one of its most significant shifts in decades. With 2025 updates to CPP and OAS, seniors are being nudged toward later retirement through higher payouts, raised thresholds, and new incentives.

For some, these changes will be a welcome opportunity to secure greater financial stability. For others, they may highlight the challenges of retiring in a high-cost economy.

Either way, the message is clear: the age of retiring automatically at 65 is over. In 2025 and beyond, Canadians must weigh health, finances, and lifestyle goals to determine the right time to leave the workforce.

5 Relevant FAQs

Q1: What is the new maximum age to defer OAS?
Canadians can now delay OAS until age 75, boosting payments by up to 48%.

Q2: How much more CPP can I earn by delaying to 70?
You can increase CPP by 0.7% for every month delayed past 65, up to 42% more at age 70.

Q3: Do I need to apply to delay OAS?
Yes. Since most are now auto-enrolled at 65, you must opt out if you want to defer.

Q4: What if I retire earlier than 65?
You can claim CPP as early as age 60, but payments are permanently reduced.

Q5: Are these changes permanent?
Yes. The 2025 reforms to CPP and OAS are long-term structural updates.