What Happens to Your CPP, OAS and Taxes If You Work Past 65

[00:00:00]The phone rings at the retirement help desk. Hi, I'm turning 65 next month, but I'm not ready to stop working. What happens to my CPP? Do I lose my OAS?

[00:00:10]Will the taxman punish me for the paycheck? If you've ever wanted to ask those exact questions, stay on the line because this whole video is that phone call. Nathan speaking, how can I help?

[00:00:23]Today, I'm answering the seven questions every working 65-year-old in Canada asks in the order the surprises arrive. What happens to your CPP contributions? The little-known benefit that grows your pension every single year you keep working. What your paycheck really does to your OAS and the moves that keep more of both. Over 27% of boomers say they plan to keep working. Almost none of them know these rules. Let's fix that in one call. Question one from the caller.

[00:00:52]First one, Nathan, do I still have to pay into CPP if I keep working after 65?

[00:00:59]Good question and it's the first surprise most people hit. Let me pull up the rule for you. Right now, before the day you turn 65, CPP contributions are mandatory. Full stop. Even if you're already collecting your CPP retirement pension, which you can start as early as 60, you're still paying 5.95% of your pensionable earnings into the plan and your employer is matching it.

[00:01:25]The 2026 max pensionable earnings figure is $74,600.

[00:01:30]So, the biggest employee contribution this year lands at $4230 and $0.45. If you're self-employed, you pay both halves, so $8,460.90.

[00:01:44]Now, here's where 65 changes things. The moment you turn 65, contributions become optional, but only if you're already collecting CPP. To actually stop the deductions from your paycheck, you have to file form CPT30.

[00:01:59]That's the election to stop contributing to the Canada Pension Plan. You fill it out, sign it the month you turn 65 or later, give a copy to every employer you have, and send the original to the CRA.

[00:02:13]The election takes effect the first day of the month after you hand your employer the form. Miss the paperwork step and payroll keeps deducting. There are two catches on this form. First, and this is where I've watched people trip up, the CPT30 is not automatic. If you just tell your boss verbally, nothing happens. Your employer needs a physical copy of the completed form in their hands. Second, if you have more than one employer, every single one needs their own copy. And if you're self-employed only, you don't use the CPT30 at all.

[00:02:45]You make the election directly on schedule eight of your tax return. One last thing before I move on. Once you turn 70, contributions stop no matter what. There is no such thing as CPP contributions past 70, even if you're still on the payroll. Note for your file. Under 65, CPP contributions are mandatory even while collecting. Between 65 and 70, they're optional, but only if you file the CPT30 and hand a copy to every employer. After 70, they stop automatically. Question two. Okay, so if I don't file the form and just keep contributing, what do those extra dollars actually buy me? Am I getting anything real or am I just topping up the general fund for everyone else? Great follow-up because most people assume post-65 contributions just vanish. They don't. Every year you keep contributing while you're collecting CPP, you earn what's called a post-retirement benefit, the PRB. Think of it as a small permanent raise on top of your existing CPP pension. You earn one PRB for each calendar year of contributions and it starts paying out the January following the year you contributed. Once it starts, it lasts for life, indexed to inflation like the rest of CPP. Here's the number I know you're asking for. In 2026, the maximum new PRB for someone aged 65 works out to $54.69 per month. That's for a full year of contributions at the maximum earnings level. If you contributed less because you earned less, your PRB is scaled down. Now, $54.69 a month doesn't sound like a fortune, but here's the trick. It's cumulative.

[00:04:34]Contribute for 5 years between 65 and 70 and you're stacking five layers of PRB on top of your base pension.

[00:04:43]At the maximum, that's roughly $273 extra every single month for the rest of your life, indexed to inflation, and it doesn't shrink if your other income drops. It's a permanent floor. The other quiet benefit, those PRB contributions also count toward your survivor CPP calculation. So, if you pass away, your spouse's survivor benefit is calculated on a slightly higher base.

[00:05:08]Note for your file. Each year you contribute to CPP after starting your pension buys you one post-retirement benefit layer, a permanent monthly top-up that starts the following January. Maximum in 2026 is $54.69 per month per year of contribution.

[00:05:28]Question three. That leads straight to my next one. If I'm still earning a paycheck, does it even make sense to turn on CPP at 65 or should I wait?

[00:05:37]This is the question I get on almost every call and I'll give you the short version because the deep timing math is a whole separate video. Here it is in three sentences. If you're working, your paycheck is probably covering your bills, which means you don't need CPP as income yet. Every month you delay past 65 adds 0.7% to your CPP for life. That's 8.4% a year or 42% total if you push it all the way to 70.

[00:06:05]And unlike the PRB, which layers on top, this is a permanent uplift on the base pension itself, indexed to inflation forever. So, for a working 65-year-old, the default answer flips. The industry rule of thumb, take it at 65, was built for someone who's actually stopping work. If you're still earning, the deferral math usually wins, especially if you're healthy and your family tends to live long. But, and this matters, if you have reason to think your longevity is on the shorter side or if you genuinely need the cash flow, that changes the answer.

[00:06:45]There's also a tax angle we'll get to in question seven. Turning CPP on while you're already in a middle bracket can be brutal. Note for your file. Working past 65 flips the CPP default. Deferral adds 0.7% per month up to 42% at age 70.

[00:07:04]If you don't need the cash flow, waiting usually wins. Question four. All right, next one. OAS. My understanding is OAS is universal, but someone at my golf club told me working past 65 can kill it. True? Half true, and let me untangle that for you. OAS has no work test, zero. There is nothing in the OAS rule book that says, "If you have a job, you don't qualify." You could be pulling a $200,000 salary at 68 and OAS is still, on paper, yours.

[00:07:39]The problem isn't the work, it's the income. OAS has something called the recovery tax, but everyone calls it the clawback.

[00:07:47]Once your net world income crosses the threshold, the CRA starts taking OAS back at a rate of 15 cents on every dollar over. And your salary is 100% part of that net world income calculation. So is your CPP, your RRSP withdrawals, your interest, your dividends grossed up, your rental profit, pretty much everything except TFSA withdrawals. For the 2026 income year, the clawback threshold is $95,323.

[00:08:23]Let me pull up two quick examples for you. Example one. You're 66, still working, salary of 70,000, plus you started CPP at 65, pulling roughly $12,000 a year. Total income around $82,000.

[00:08:41]That's below $95,323.

[00:08:44]Full OS, currently around $742.31 a month at ages 65 to 74, lands in your account every month. No clawback.

[00:08:55]Example two. Same person, but the salary is $110,000.

[00:09:01]Add the $12,000 of CPP and you're at 122,000.

[00:09:05]That's $26,677 over the threshold. Multiply by 15% and the CRA wants back roughly $4,001 for the year, about $333 a month of your OS gone.

[00:09:21]You're still getting OS, but a big chunk is being clawed back. And the full clawback ceiling for someone aged 65 to 74 in the 2026 income year works out to roughly $155,000.

[00:09:34]Above that line, OAS is fully wiped out for the year. Note for your file. OAS has no work task, but your salary counts toward net world income. 2026 clawback starts at $95,323 and takes 15% per dollar over. Full wipeout for ages 65 to 74 hits around $155,000.

[00:09:57]Question five, if I'm going to be over that threshold for a few more years while I'm working, should I just delay OAS until I retire?

[00:10:06]Yes, and it's one of the cleanest moves in the book. OAS can be deferred up to age 70, and every month you delay adds 0.6% to your monthly amount, 7.2% per year, or 36% total by 70. So, if you know you're going to be inside clawback territory from 65 to 68, deferring means you receive $0 of clawed back OAS during those years, and then when you finally turn it on at 68 or later, you get a permanently larger check. There's no penalty, no lost eligibility, no complicated paperwork. You just don't apply until you want it. That's the whole move. The deep dive on OAS timing is a separate call, but for high-earning workers, the deferral option is the built-in clawback dodge Ottawa gives you. Note for your file, delay OS up to age 70 to sidestep the clawback while you're still earning. Every month delayed adds 0.6% up to a 36% permanent uplift. Question six, fair enough. Next one, my RRSP, can I still contribute? I keep hearing 71 is the cutoff. The 71 cutoff is real, but it's more generous than people think. Here's the rule, earned income, which includes your salary and self-employment income, keeps generating brand new RRSP contribution room at 18% of that income every year, right up to and including the year you turn 71. Your CPP and OAS do not count as earned income for this calculation, but your paycheck absolutely does. So, a 68-year-old earning $80,000 in salary generates roughly $14,400 of new RRSP room for the following year.

[00:11:58]You can contribute to your own RRSP until December 31st of the year you turn 71. After that, your personal RRSP has to be closed or converted to a RRF. Two extra angles worth knowing. First, the RRSP deduction is worth more when you're working past 65, not less.

[00:12:22]Because your salary is stacked on top of CPP and OAS, your marginal rate is often higher than it was at 60. A dollar of RRSP deduction saves you tax at that top marginal rate. Second, this is the little-known one, if you have a younger spouse or common-law partner, you can keep contributing to a spousal RRSP for their plan up until the end of the year they turn 71 using your own RRSP room.

[00:12:52]So, if you're 72 and your spouse is 68, you can still be socking money into a spousal RRSP and taking the deduction yourself.

[00:13:02]That's one of the most powerful late career tax moves in the Canadian rulebook, and it goes untouched by most working seniors. Note for your file, working income keeps generating RRSP room until the end of the year you turn 71.

[00:13:17]Personal RRSP must close that year, but spousal RRSP contributions can continue as long as your spouse is 71 or younger.

[00:13:24]Question seven, okay? Last big one. When April rolls around, what does all this actually look like on my tax return? Am I in for a shock? Almost certainly. And this is where I have to pull up your file and give you the honest answer. The problem is called stacking.

[00:13:44]When you were 63 and just working, your salary sat on the tax return alone. Now you're 66 and three things pile on top of each other in the same year. Your salary, your CPP, which is fully taxable, and your OAS, also fully taxable. All three show up on one T1 return and they get added together before the federal brackets take a swing.

[00:14:08]For 2026, the federal brackets look like this. The first $58,523 of taxable income is taxed at 14%.

[00:14:19]From $58,523 up to $117,425, the rate is 20.5%.

[00:14:28]From there you hit 26%, then 29%, then 33% at the top. Then your province stacks its own brackets on top of that.

[00:14:38]Here's the trap. Payroll withholding is calculated based on your salary alone.

[00:14:43]Your employer has no idea what your CPP and OAS are paying you. Service Canada withholds a small amount from CPP and OAS only if you specifically ask them to. And most people never did. So all three income streams get lightly taxed during the year and then April arrives, everything gets added together and you find out you owe a big balance. I've watched this catch working seniors every single spring. The fix is either to ask Service Canada to raise the tax withheld on your CPP and OAS using form ISP 3520 or to make quarterly installments to the CRA or to use an RRSP deduction to blunt the impact. Note for your file. Working seniors stack salary, CPP, and OAS onto one tax return.

[00:15:34]22 to 6 federal brackets bite at $58,523 and again at $117,045.

[00:15:43]Withholding rarely matches. Raise it voluntarily or expect a balance owing.

[00:15:48]Two quick items before I wrap the call.

[00:15:50]EI premiums are still deducted from your paycheck whether you're a 55 or 75.

[00:15:55]There is no age exemption. And yes, you can claim regular EI benefits if you lose the job at any age. Age doesn't disqualify you. And one final note for anyone collecting GIS, the employment income exemption is generous.

[00:16:11]The first $5,000 you earn is fully exempt from the GIS calculation and only 50% of the next $10,000. So, the first $15,000 of a part-time paycheck only feeds $5,000 of income into the test.

[00:16:27]Now, let me read your file summary back so you've got the whole call in seven lines. Rule one, under 65, CPP contributions are mandatory. Between 65 and 70, they're optional, but only if you file the CPT30 and give a copy to every employer. Rule two, every year you contribute past 65 buys one post-retirement benefit layer up to $54.69 a month per year at the 2026 maximum paid for life starting the following January. Rule three, working past 65 flips the CPP default. Deferral adds 0.7% per month up to 42% at age 70. Rule four, OAS has no work test, but your salary counts toward net world income.

[00:17:17]Clawback starts at 95,323 dollars for the 2026 income year and takes 15 cents on the dollar. Rule five, OAS can be deferred up to age 70, adding 0.6% per month. A clean clawback dodge for high earners still on payroll. Rule six, earned income keeps generating RRSP room until the end of the year. You turn 71. Spousal RRSP contributions can continue past your own 71 as long as your spouse is 71 or younger. Rule seven, salary, CPP, and OAS all stack on one tax return. For 2026 federal brackets bite at 58,523 dollars and again at 117,045 dollars. Withholding rarely matches, so raise it voluntarily or expect a balance owing in April.

[00:18:12]That's the whole call.

[00:18:14]Anything else I can help you with today?