Canada OAP and US Social Security

[nelsona]

Just one little point of correction. WE refer to getting an extra year as 1/40th. But in terms of the individual, it not 1/40, it is 1/(the years he has).

So, someone who has say 10 years at age 65 when he waits a year, gets aa 10% increase: 11/40th instead of 10/40ths. If 400 was the max, at 65 he would get $100, but at 66, he would get $110: a 10 percent increase, by choosing that method)

So whether or when the 0.6 per month is better, on also has to consider the number of years one already has.
Eventually the 0.6 will surpass the extra slices, but that will be dependent on each situation, and it may not be before 70.

[nelsona]

The cutoff is 14 year of eligibility at 65. If one has less than that, adding years will always be better than accepting the 65 year amount and adding the 0/6 per month.

Of couse, on would also need to consider if the need to reach the 20 year mark (wishing perhaps to move to a country without an agreement). then the 15 to 19 year group may wish to wait.

But certainly, for 20 and up, freezing the 65 amount and using the 0/6 deferal reward will win out --- which of course brings us back to the decision on whether to wait at all.

[MaggieA]

Right, I completely agree. Excellent clarification that people with under 14 years of eligibility are better off adding years of eligibility rather than months at 0.6%.

I also agree about deferring. I see articles in the media all the time about how deferring CPP all the way to age 70 is the best choice. They hedge more with regard to OAS. In my opinion, people need to consider their own circumstances of course, and that's probably the most important thing. But I do rather question the drumbeat in favour of deferring. For myself, the math didn't make sense. With regard to OAS specifically, I think I'm likely to be in the privileged situation of being subject to clawback err recovery tax, in my 70s. I'm not complaining about this, but it does make me figure that if I can get a bit of OAS in the meantime, I might as well collect it.

[nelsona]

The only one that *might* make sense is SS, but ONLY if you are still working (or planning to work, even in Canada) since you will lose SS for those working years up to your full retirement age, and lose the deferral bonus.

You might also wait if you are planning to return to US once Medicare kicks in at 65, to avoid the high Cdn tax on SS.