How Retirees Accidentally Lose Thousands to OAS Clawback

追加: 2026-05-09

[00:00:00]I had a client call me in a panic last April. 73 years old, retired teacher, 1.4 million saved, and she just received a letter from the CRA saying she owed back $4,200 in old age security. I don't understand, she said. I've been collecting old age security for 8 years.

[00:00:22]Why do I suddenly owe money? Here's what happened. She sold an investment property and triggered a $60,000 taxable capital gain that pushed her income over the OAS clawback threshold and the government clawed back roughly half her OAS for the year. Gone. One transaction, $4,200 gone. And she had no idea it was coming. If you're collecting OAS or about to, you need to see this. Hi, I'm Tanya SSA, investment advisor at CG Wealth Management. I help affluent Canadians navigate retirement planning.

[00:01:02]And one of the most frustrating things I see is retirees losing thousands of dollars to OAS clawback without realizing it until it's too late. The government doesn't send you a warning.

[00:01:15]They don't flag it on your tax software.

[00:01:17]They just quietly take back 15 cents of every OAS dollar for every dollar you earn above the threshold. And for retirees with RRSPs, pensions, or investment income, it happens more often than you think. Today, I'm going to show you exactly how OAS clawback works and more importantly, how to avoid accidentally triggering it. If this is helping you keep more of your retirement income, make sure to like, comment, and subscribe so you don't miss the next one. By the end of this video, you'll know the three situations that trigger OAS clawback most often and what to do about them before the CRA comes calling.

[00:02:02]Here's how OAS clawback works. In 2026, if your individual income is in the low to mid $90,000 range, the government starts clawing back your old age security at a rate of 15% on every dollar above that threshold. OAS for someone aged 65 to 74 is $8,917 per year. If you're 75 or older, it's $9,798.

[00:02:34]That means if your income hits roughly $152,000 to $155,000, your OAS is clawed back entirely. You get zero. Now, here's the part that catches people. It isn't based on household income. It's based on your individual income, line 23600 on your tax return. And it includes everything. RIFF withdrawals, CPP, pension income, capital gains, dividends, rental income, employment income. Most retirees think, "I'm not rich. I won't hit that threshold." But then life happens. You turn 71 and your RRSP converts to a riff. The government forces you to withdraw 5.28% whether you need it or not. Or you sell a rental property and trigger a capital gain. or you help your kids with a lump sum withdrawal from your RRSP. Suddenly, you're over the threshold and you're losing $1,500 in OAS for every $10,000 of extra income. Let me show you the three ways this happens most often. Part one, the RIFF minimum trap. This is the most common way affluent retirees accidentally lose OAS. Here's what I see consistently. You arrive at age 71 with 1.5 million in your RRSP. You start CPP and OAS at 65 and you've been pulling from your RRSP to cover your lifestyle.

[00:04:05]Now, your RRSP converts to a RIFF. The government forces you to withdraw a minimum of 5.28% that first year on 1.5 million. at $79,200 before you've touched a dollar for discretionary spending. Add CPP, $18,92.

[00:04:27]Add OAS, $8,917.

[00:04:31]These examples assume maximum CPP for simplicity. You're at $106,29 in income. Now you're well over the OAS clawback threshold. The government starts clawing back 15% on the access, roughly $1,900.

[00:04:52]But it gets worse because you still need money to live. So you withdraw another $70,000 from your RIFF on top of the forced minimum to cover your lifestyle.

[00:05:02]Now your income is $176,29.

[00:05:08]At that income level, you've lost your entire OAS payment of $8,917.

[00:05:16]This is hypothetical, but based on situations I see consistently. Here's the point. RIFF minimums don't care about OAS clawback. They don't care if you need the money. They stack on top of everything else, and they push affluent retirees over the edge every single year. Part two, the one-time withdrawal surprise. This is one that catches people completely offguard. You're 68 years old. You've been collecting OAS for three years with no issues. Your income is stable. $50,000 from your RRSP, $18,92 from your CPP, $8,917 from OAS. Total $77,09.

[00:06:02]Well under the threshold. Then your daughter calls. She's buying her first house and needs help with the down payment. You decide to withdraw $75,000 from your RRSPs as a gift. That year, your income jumps to $152,09.

[00:06:20]You're now well over the OAS clawback threshold. The government claws back the excess at 15% and you've nearly lost your entire year of OAS. I worked with a couple last year. Retired couple, both 70, living comfortably. They decided to help their son buy a condo. They withdrew $100,000 from the husband's RSP. He lost his entire OAS that year, $8,917.

[00:06:50]His wife's income wasn't affected, so she kept hers, but they still lost nearly $9,000 in government benefits because of one withdrawal. They called me after they got their CRA notice. Can we reverse this? No. Once the income is reported, it's done. Here's what they should have done. Split the withdrawal over two years, $50,000 each year, or withdraw from a TFSA instead, or structured as a loan and withdraw smaller amounts annually. Any of those options would have kept them under the threshold and saved the OAS. but they didn't know and now it's gone. If you're realizing you've triggered OAS clawback in the past or if you're worried about it in the future, that's exactly why we help retirees build income strategies that protect government benefits. Link is in the description to schedule a conversation. Part three, the pension splitting mistake. This one is subtle and it costs couples thousands. Here's a real scenario. You're married. You have $120,000 in RIFF income and a $20,000 pension.

[00:08:04]Your spouse has no RIFF and no pension.

[00:08:08]You decide to use pension income splitting to lower your taxes. You allocate 50% of your RIFF income to your spouse, but you keep the full pension on your return. Now, you each report $60,000 in RIFF income on your taxes.

[00:08:24]Sounds smart, right? But here's the problem. Your actual income is $60,000 RIFF plus $20,000 pension plus $18,092 CPP plus $8,917 in OAS.

[00:08:42]$107,09.

[00:08:45]You're well over the threshold. The government claws back roughly $2,000 in OAS. Your spouse's income is $60,000 riff plus $18,092 CPP plus $8,917 OAS equals $87,09.

[00:09:08]They're under the threshold they keep their full OAS. The household OAS is roughly $15,800.

[00:09:17]But what if you had split the RIFF 4060 instead? Your income would be $48,000 RIFF, $20,000 pension, and $18,092 CPP plus $8,917 OAS equals $95,099.

[00:09:35]You're barely over the threshold.

[00:09:38]Clawback minimal. Your spouse's income, $72,000 RIFF plus $18,92 CPP plus $8,917 OAS equals $99,09.

[00:09:54]They're modestly over a clawback, under $1,000. Total household OAS is roughly $16,700.

[00:10:03]That's nearly $1,000 more in OAS every year just by changing how you split income. I see couples split income 5050 automatically because it feels fair, but fair doesn't always mean tax efficient.

[00:10:18]Every couple's situation is different, but here's the broader point. Pension income splitting is a powerful tool, but if you don't account for OAS clawback thresholds, you can accidentally cost yourself thousands in lost benefits.

[00:10:34]Now, I know what some of you are thinking. But if my income is high enough to trigger OAS, aren't I doing fine financially? Absolutely. If you're losing OAS to clawback, you're not struggling. But here is my question.

[00:10:49]Would you leave $9,000 on the table just because you don't need it? Because that's what OAS clawback is. It's the government taking back money you're entitled to. Money you've paid into the system your entire working life because you didn't structure your income properly. It's not about need. It's about not leaving money on the table when you don't have to. Here's a three question framework to help you avoid accidental OAS clawback. Screenshot this question one. What's your total income in retirement, including RIT minimums, CPP pensions, and investment income? If you're approaching the low to mid $90,000 range, you need a strategy to stay under the threshold. Question two, do you have large RSPS that will convert to riffs at 71? If yes, run projections now to see what your forced RIFF minimums will look like. If they'll push you over the threshold, consider early RSP withdrawals in low income years, ages 60 to 70 to reduce the balance.

[00:11:58]Question three, are you planning any one-time withdrawals, helping kids, selling a property, taking a lump sum?

[00:12:06]If yes, model the OAS impact before you pull the trigger. spread withdrawals over multiple years. Use TFSAs or structure gifts as loans to avoid the clawback. This isn't guesswork. You can model this. You can protect your income yearbyear and see exactly when clawback hits. OAS clawback isn't a punishment.

[00:12:29]It's a recovery tax on higher income retirees. And it's completely legal, but it's also completely avoidable if you plan ahead. The retirees who lose thousands to OAS clawback are the ones who didn't see it coming. They didn't realize RIFF minimums would push them over the threshold. They didn't think about the tax impact of a one-time withdrawal. They split pension income 50/50 without considering OAS. And once the income is reported, it's too late.

[00:13:00]This doesn't mean you should structure your entire retirement around avoiding OAS clawback, but it does mean you should understand when you're triggering it and whether there's a smarter way to structure your withdrawals. If you want personalized help building an income strategy that minimizes OAS clawback, one that accounts for RIFF minimums, pension splitting, CPP timing, and one-time withdrawals, let's connect.

[00:13:27]We'll review your income sources, project your clawback exposure, and show you exactly how to keep more of your government benefits. Click the link in the description to schedule a conversation with me. Thank you for your time, and I'll see you in the next video.