Turning 65 has traditionally been associated with one major milestone:

Retirement.

But today, plenty of Canadians continue working well beyond 65, while others retire years earlier.

So age 65 isn’t necessarily the finish line anymore.

Financially, however, it remains an important milestone.

Government benefits become available, tax credits change, retirement income decisions become more important, and the way you draw money from your savings deserves another look.

Here are some of the biggest financial considerations when you turn 65.

1. You Become Eligible for Old Age Security

One of the most obvious changes is eligibility for Old Age Security (OAS).

Unlike CPP, OAS isn’t based on how much you contributed during your career. Eligibility generally depends on your age and how long you’ve lived in Canada after age 18.

You don’t necessarily have to start OAS at 65.

You can delay it until as late as age 70. For every month you delay after 65, your eventual payment increases by 0.6%, up to a maximum increase of 36% at age 70.

But delaying isn’t automatically the right choice.

Your health, other income, taxes, retirement spending and expected longevity should all be considered.

2. CPP Becomes an Important Decision

CPP can actually begin as early as age 60, so turning 65 doesn’t suddenly make you eligible.

What makes 65 important is that it’s considered the standard starting age.

Taking CPP before 65 permanently reduces your monthly benefit, while delaying it beyond 65 increases it.

If you delay CPP after 65, your pension increases by 0.7% for every month you wait, up to age 70.

That’s up to 42% more than starting at 65.

For someone with sufficient investments or other income, delaying CPP can therefore be worth considering.

But again, there isn’t one correct answer for everyone.

3. Your Tax Situation Can Change

Turning 65 also opens the door to certain federal tax provisions.

For example, you may become eligible for the age amount tax credit, depending on your income.

Certain types of eligible pension income may also qualify for the pension income amount, which can provide a federal tax credit on up to $2,000 of qualifying pension income.

Eligible pension income can also potentially be split with a spouse or common-law partner for tax purposes.

For some couples, income splitting can reduce the family’s overall tax burden.

This is why retirement income planning shouldn’t just focus on how much money you’re withdrawing.

Where that income comes from matters too.

4. OAS Clawback Becomes Something to Watch

For higher-income retirees, OAS introduces another planning consideration.

The OAS recovery tax, often called the OAS clawback, begins once an individual’s net income exceeds an annually adjusted threshold.

As income rises beyond that threshold, part or eventually all of the OAS benefit can be recovered.

This becomes especially relevant for people with significant:

• RRSPs and RRIFs
• Pension income
• Investment income
• Employment or business income

Someone can have plenty of money to fund retirement while still structuring withdrawals inefficiently from a tax perspective.

That makes the years around 65 an important time to think ahead—not just about this year’s income, but about income in your 70s as well.

5. Your RRSP Doesn’t Have to Become a RRIF Yet

Another common misconception is that your RRSP needs to be converted into a RRIF at 65.

It doesn’t.

You generally have until the end of the year you turn 71 to mature your RRSP, which can include converting it to a RRIF.

That creates an important planning window between 65 and 71.

For some retirees, it may make sense to intentionally withdraw from their RRSP during those years rather than waiting for mandatory RRIF withdrawals later.

Why?

Because once CPP, OAS, pensions and RRIF withdrawals are all arriving at the same time, taxable income can become considerably higher.

Sometimes paying tax earlier at a lower rate can be preferable to being forced to recognize more taxable income later.

6. Your Portfolio May Need a Different Job

At 45, your portfolio may primarily have one objective:

Growth.

At 65, the job can become more complicated.

Now your investments may need to provide:

Growth.

Income.

Liquidity.

Inflation protection.

And stability during market downturns.

That doesn’t mean turning 65 automatically means becoming a conservative investor.

In fact, if your retirement could last 25 or 30 years, maintaining some growth can remain important.

But your investment strategy should reflect the fact that you may now be withdrawing from the portfolio rather than constantly adding to it.

7. Spending Becomes Just as Important as Saving

Most people spend their careers asking:

“Am I saving enough?”

Around retirement, the question changes:

“How much can I comfortably spend?”

This transition can be surprisingly difficult.

Someone who has spent 30 or 40 years accumulating wealth may suddenly have to become comfortable drawing it down.

That’s where a retirement income plan becomes valuable.

How much can you spend?

Which accounts should the money come from?

How do CPP and OAS fit in?

What happens during a market downturn?

What if you live to 95?

Retirement is no longer primarily an accumulation problem.

It’s a cash-flow problem.

8. Age 65 Is a Checkpoint, Not a Deadline

Perhaps the biggest mistake is assuming there’s something you’re supposed to do at 65.

You don’t necessarily have to retire.

You don’t necessarily have to take CPP.

You don’t necessarily have to start OAS.

You don’t have to convert your RRSP.

And you don’t automatically need to dramatically reduce investment risk.

Age 65 is better viewed as a financial checkpoint.

It’s an opportunity to review how all the pieces of your financial life now work together.

The Bottom Line

Turning 65 isn’t simply about becoming eligible for government benefits.

It’s a point where several financial decisions begin intersecting.

CPP.

OAS.

Taxes.

RRSP withdrawals.

Investments.

Retirement spending.

Look at each decision independently and you may miss opportunities elsewhere.

Look at them together and you can start answering the question that really matters:

How do I turn everything I’ve accumulated into a sustainable, tax-efficient income that supports the retirement I actually want?

That’s ultimately what planning at 65 should be about.

*The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written by Rick Irwin, for the benefit of Rick Irwin, Mutual Fund Representative with Trinity Wealth Partners, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.