Posted by Tim Stobbs on March 30, 2012
Well the federal budget came down yesterday, which you can read here the official documents. But perhaps the most significant change for future retirees is the shift to move the start of OAS from 65 to 67 by April 2023 (see chapter 4). That means if you are 54 or older by March 31, 2012, you just won yourself a free pass on worrying about this issue, which means you can stop reading now if you like.
For everyone else, I want you all to take a deep breath and realize something very important: the maximum benefit you can receive from OAS is just $6481 per year in 2011. So in reality you are out just under $13,000 in benefits, so let’s be blunt for a moment: it isn’t a big deal. If your retirement plans are so tight that losing $13,000 screws them up you have more serious issues to worry about like saving a lot more. Even if your a couple retiring you lost at most $26,000 of benefits, which becomes a slightly bigger number, but in the end I can make that up by delaying my plan by three months. My goodness, that is nothing compared to what the stock market can do to my plan in a day at that point.
The reality is the federal government all did us a favour by giving us a 11 years heads up on a policy change so you can now adjust your plan for it. Heck the even gave an extra five year phase in period on top of the 11 year notice so if your 53 today you don’t have to fully wait until 67 to collect OAS. Then as an added bonus the gave people the option to take OAS later starting in 2013 and get a larger payout. You can do that to a maximum of five years which in their example would raise the payout from $6481 to $8814 per year.
In the end the federal budget change despite all the negative media coverage on this issue just made my life easier. In my plan, I had assumed I only got half of that benefit so with this change the program just got a little more stable, so perhaps I will luck out and get more than that. Overall, it isn’t changing a damn thing for me and likely won’t for a lot of other people.