Canada Retirement Age 2025 Update, Will Canadians Have to Work Longer Before Retiring?

For decades, Canadians have counted on retiring at 65 as the golden standard. But in 2025, that assumption is being challenged. With longer lifespans, rising costs, and mounting pressure on public pension programs, the federal government is actively considering adjustments that could push retirement later for millions of citizens.

The proposals now on the table include a gradual shift of Old Age Security (OAS) eligibility from 65 to 67 and stronger incentives for Canadians to delay Canada Pension Plan (CPP) benefits closer to age 70. If implemented, these changes could reshape the retirement landscape for future generations

Why the Retirement Age Debate is Back

Canada’s population is aging rapidly. By 2040, the number of seniors aged 65 and above is projected to nearly double. With people living longer, many retirees will spend 25 to 30 years in retirement—drawing benefits far longer than when OAS and CPP were first designed.

This longevity, while a positive social achievement, is straining government budgets. Without changes, policymakers warn, pension sustainability could be at risk, potentially requiring either higher taxes or reduced benefits in the future.

The government’s solution: encourage longer work lives and align benefit eligibility with the reality of extended lifespans.

Proposed Changes to OAS and CPP in 2025

So, what exactly is being proposed? While nothing is finalized, discussions point toward several key shifts:

Program	Current Rules	Proposed Changes
CPP (early start)	Age 60 (reduced payments)	No change, but more incentives to delay
CPP (maximum)	Age 70 (increased payments)	Enhanced incentives to wait
OAS (standard age)	Age 65	Gradual increase to 67

Currently, Canadians can start collecting CPP as early as 60, though monthly amounts are reduced, or delay until age 70, when payments are significantly higher. OAS, on the other hand, starts at 65 but can also be deferred up to five years.

The proposed change would push the OAS baseline from 65 to 67, phased in over time. At the same time, Ottawa wants to make delaying CPP and OAS more attractive financially, rewarding those who wait with larger payouts.

Why the Push Toward Later Retirement?

The driving forces behind these proposals are clear:

1. Demographic Pressures: Canada is aging faster than most developed countries, with baby boomers moving into retirement in record numbers.
2. Fiscal Sustainability: Longer retirement periods mean more years of government payments, creating funding gaps.
3. Workforce Participation: Encouraging older Canadians to work longer could offset labour shortages and support the economy.
4. International Alignment: Many countries—including the U.S., U.K., and Australia—are already raising their retirement ages or adjusting pension structures.

The goal is not to force seniors to work indefinitely but to create flexibility and ensure the pension system remains solvent for generations to come.

How This Affects Near-Retirees

If you’re already in your 60s, don’t panic. Any changes to OAS or CPP eligibility would likely be phased in gradually and not affect those close to retirement. Policymakers are clear that sudden changes could unfairly penalize Canadians who have already built retirement plans around existing rules.

But if you’re in your 40s or younger, these updates could directly impact your retirement timeline. Future retirees may need to work longer, save more, and plan differently than today’s seniors.

Impact on Retirement Planning

If the OAS age rises to 67 and CPP deferrals become more attractive, here’s what it could mean for Canadians:

• Working Longer: Many will stay in the workforce past 65 to bridge the gap until OAS kicks in.
• Delaying CPP: More Canadians may opt to delay CPP until 70 for higher monthly payments.
• Increased Savings Needs: Personal savings through RRSPs, TFSAs, or employer pensions will become more critical.
• Flexible Retirement: Retirement may no longer be a “one age fits all” milestone but a phased transition depending on income, health, and savings.

Financial Strategies to Prepare

Whether you’re 25 or 55, the potential shift in retirement age underscores the importance of planning ahead. Here are key strategies:

1. Maximize Registered Savings

Regular contributions to RRSPs and TFSAs can help build a strong safety net, giving you flexibility if government benefits are delayed.

2. Use My Service Canada Account

This online tool allows you to see your projected CPP and OAS benefits based on contributions and age, helping you plan realistically.

3. Consider Delaying Benefits

If financially feasible, delaying CPP or OAS can significantly increase your monthly payouts in later years.

4. Work With a Financial Advisor

A qualified advisor can help you create a customized strategy, especially if you’re unsure how the proposed changes may affect you.

The Bigger Picture: Retirement Beyond 2025

This debate goes beyond numbers. It reflects how Canada views aging, work, and dignity in retirement. While pushing retirement age later may spark criticism, policymakers argue it’s about long-term security rather than short-term politics.

By rebalancing the system now, the government hopes to avoid future crises where benefits are cut suddenly or taxes rise sharply. The proposed changes may feel uncomfortable, but they are framed as necessary adjustments for a sustainable future.

What Canadians Should Do Now

The best approach is staying informed and proactive. Even if you’re decades away from retirement, start building habits that protect your financial future:

• Save consistently—even small amounts add up over time.
• Diversify income sources beyond government pensions.
• Stay healthy, as longer working lives depend on personal well-being.
• Stay updated—policy changes will be announced well in advance, giving Canadians time to adapt.

5 FAQs

Q1: Is Canada really increasing the retirement age to 67?
Not yet. It’s a proposal under review for 2025. If approved, the OAS eligibility age would gradually move from 65 to 67.

Q2: Will CPP rules change in 2025?
CPP’s early and late retirement rules (60–70) remain, but the government is considering stronger incentives for delaying CPP until 70.

Q3: Who will be affected by these changes?
Canadians in their 40s or younger are most likely to feel the impact. Those already close to retirement are less likely to be affected.

Q4: Why is the retirement age being reconsidered?
Because Canadians are living longer and collecting benefits for decades, creating financial strain on OAS and CPP sustainability.

Q5: How can I prepare for later retirement age?
Start saving through RRSPs and TFSAs, consider employer pensions, and review your projected benefits with Service Canada tools.