Financial planning is a necessary process we all must go through regardless of age, but as many people reach their golden years, they begin to pay more attention to it for good reason! The Old Age Security (OAS) Program is a major program set up by the Canadian government for seniors to help support and provide them with a steady income stream. OAS is a testament to Canada’s commitment to the well-being of its aging population, but not many leverage its benefits.
This is why it is important to see a financial advisor in Edmonton. Keep reading to explore all the facets of the Old Age Security Program, from the eligibility criteria to how to apply for it for yourself or your loved ones and enjoy its benefits.
Eligibility Criteria for Old Age Security
If you’re planning your retirement or know someone who is, you need to understand the qualifications for Old Age Security. The program was created for older adults of a certain age. Being a beneficiary of OAS does not exempt you from having other popular Canadian financial retirement plans like having an RRSP. This is why you should consult a financial planner in Alberta to know the proper financial steps to take on your journey to a hassle-free retirement.
To be eligible for the benefits of OAS, you must meet these criteria;
You must be a legal resident of Canada and must have resided in the country for Ten (10) years after you turned 18.
The benefits of OAS are subject to an income test. Higher-income individuals may need to repay a particular portion of or the full OAS benefits through the OAS recovery tax.
To qualify for the benefits of OAS, you must be aged 65 years or older, and you have the option to defer the benefits for up to 5 years so you can receive a higher OAS payment when you claim the benefits. So, what are the benefits?
Old Age Security Benefits
The financial support that OAS provides can significantly contribute to your overall income or the income of the retiree. The maximum OAS monthly amount is $615.37. However, it is important to note that this may vary based on the year it is received and the number of years the retiree has stayed in Canada after age 18.
The OAS income has nothing to do with your employment history, so it can be a major source of income if the retiree does not have access to a pension plan from a workplace. Basically, OAS is a great way for Canadians to have some sort of financial security and stability after age 65.
From July 2022, the OAS program expanded, and the Canadian government introduced different measures to enhance the program for older seniors. So, seniors aged 75 and older now receive a 10% increase in their OAS benefits. The change was implemented to help support seniors as they face the current increase in the cost of living and health expenses.
How to Apply for Old Age Security
The process of applying for Old Age security is straightforward and hassle-free. Once you are close to the eligible age, you will receive an application package by mail from Service Canada. Everything you need to know about applying and all the necessary forms you need to submit will be included in the package. To start enjoying the benefits early, you have to apply months before you officially turn 65 years of age.
What would you need to prepare for the OAS application? The application will require you to submit your personal information, proof of identity, and proof of residence. Once you complete and submit the application, it will be reviewed by Service Canada, and if you’re successful, you’ll start receiving the OAS pension. If you do not automatically receive the application mail from Service Canada, you may receive a letter from Service Canada asking you to apply a month after you turn 64.
What is Old Age Security Recovery Tax?
The OAS recovery tax is designed to ensure that people who have earned more than enough income give back to the program. It applies to only individuals within the higher income bracket and kicks in when a senior’s income exceeds a pre-set annual threshold. For every dollar beyond the pre-set threshold, 15% of the OAS benefits must be repaid. If you’re unsure of what this means for you, see a financial advisor Edmonton to get clarity.
As you put your retirement plans into place, it’s important to know the programs and plans that you can benefit from as a senior so you can plan effectively. Ultimately, the Old Age Security program complements all your other retirement savings and pension plans so that seniors can enjoy their golden years with peak financial confidence.
A great way to plan effectively is to consult with professional financial advisors in Canada. This will not only help you stay informed about new developments but also help you take advantage of everything the government has prepared for you to have a smooth retirement.
At DeHaan Private Wealth, our team of professional financial advisors in Edmonton is readily available to speak with you and provide proven financial solutions. Feel free to schedule a consultation. Let’s help you on your journey towards financial freedom in retirement.