The dream of retiring at 65—closing the laptop, collecting pension cheques, and enjoying decades of relaxation—has been central to Canadian life for generations. But by 2025, that dream looks less certain. Rising life expectancy, soaring living costs, and government pension adjustments are reshaping the concept of retirement into something far more flexible—and uncertain.
This article takes a deep dive into why the traditional retirement age is shifting, what incentives are built into CPP (Canada Pension Plan) and OAS (Old Age Security), and why Canadians may find themselves working longer than expected.
Why 65 Became the “Magic Number”
The retirement age of 65 dates back to the mid-20th century, when lifespans were shorter and jobs were far more physically demanding. Pensions were designed to support retirees for 10 to 15 years, not the 25 to 30 years common today.
According to Statistics Canada, the average Canadian now lives into their mid-80s. For many, this means retirement could last nearly as long as their working career—a second adulthood that requires substantial savings.
Add to this the rising costs of housing, groceries, healthcare, and services, and suddenly the idea of comfortably retiring at 65 becomes less realistic.
The Math Behind Pension Timing (CPP and OAS)
The government has carefully structured CPP and OAS payouts to encourage Canadians to retire later. The incentives (or penalties) are built right into the system.
यह भी पढ़े:
Universal Basic Income in Canada – What It Means, Who Supports It, and When It Could Arrive
| Benefit | Earliest Start | Standard Age | Maximum Delay | Reduction (per month early) | Increase (per month delayed) |
|---|---|---|---|---|---|
| CPP | 60 | 65 | 70 | -0.6% | +0.7% |
| OAS | 65 | 65 | 70 | N/A | +0.6% |
- Taking CPP at 60 means a 36% reduction in monthly benefits compared to waiting until 65.
- Delaying CPP to 70 means a 42% increase in monthly benefits for life.
- OAS doesn’t allow early claims, but delaying until 70 boosts payments by 36%.
The choice comes down to health, longevity, and finances. For Canadians with health issues or shorter life expectancy, claiming early may make sense. But for healthy individuals with longer lifespans, delaying retirement could mean far greater lifetime income.
Why More Canadians Are Working Past 65
In 2000, just 1 in 10 Canadians over 65 were still working. Today, that number has doubled to 1 in 5, according to Statistics Canada.
The reasons are both financial and social:
- Rising costs: Many retirees find that CPP, OAS, and savings aren’t enough.
- Active lifestyles: Seniors live healthier, longer lives, making work feasible.
- Phased retirement: Instead of quitting cold turkey, many shift to part-time, consulting, or passion projects.
For many, retirement has evolved into a gradual transition rather than an abrupt end to working life.
Could the Retirement Age Be Raised in Canada?
In 2012, the Canadian government announced plans to raise OAS eligibility from 65 to 67. The proposal was scrapped in 2016 after backlash, but the financial pressures that sparked it remain.
Canada is facing a demographic squeeze: fewer workers contributing, more retirees collecting, and rising pension costs. Other countries, including the United States and the United Kingdom, have already raised their retirement ages.
If the strain on pension systems grows, Canada could revisit the proposal to raise the retirement age in the coming years.
The Real Retirement Question: Affordability
Ultimately, the key question is not “What age should I retire?” but “Can I afford to retire comfortably?”
This depends on three pillars:
- Savings – RRSPs, TFSAs, pensions, and investments.
- Pension timing – Whether you claim CPP/OAS early, on time, or delay for larger benefits.
- Lifestyle choices – A modest lifestyle may require less, while travel and hobbies demand more.
With retirement now spanning decades, Canadians must plan more strategically than ever.
Preparing for Retirement in 2025 and Beyond
Experts suggest Canadians approaching retirement should:
- Assess long-term health to decide whether early or delayed CPP makes sense.
- Maximize savings in RRSPs and TFSAs to supplement government benefits.
- Consider phased retirement to maintain income while easing into post-work life.
- Monitor pension policy changes, as adjustments to CPP and OAS could arrive in the coming years.
FAQs – Retirement Age in Canada 2025
Q1. Is 65 still the official retirement age in Canada?
Yes, but it is no longer a hard rule. Many Canadians now retire later due to financial and lifestyle factors.
Q2. What happens if I take CPP early at 60?
You’ll receive 36% less per month compared to waiting until 65.
Q3. Can I delay OAS beyond 65?
Yes. Delaying until 70 increases your monthly benefit by 36% for life.
Q4. Is Canada considering raising the retirement age?
While no official change is planned, experts warn it could return due to pension system pressures.
यह भी पढ़े:
CRA Confirms $628 Grocery Rebate for September, Check Eligibility Rules and Payment Dates
Q5. What’s the best retirement strategy?
It depends on your health, savings, and lifestyle expectations. Delaying benefits works best for those with longer life expectancy.