There are plenty of reasons to celebrate 65 years, especially if you enjoy good health and financial security.
Teachers' pension reduced
Your Teachers’ pension is reduced at age 65 to reflect its integration with the Canada Pension Plan (CPP). The change takes place the month following your 65th birthday.
The reduction, which is based on a formula, will decrease a typical $44,000 annual pension by approximately $5,400 a year. The reduction equals about two-thirds of the unreduced CPP pension you would qualify to receive at 65.
Many teachers choose to begin a reduced CPP retirement pension early. Beginning CPP earlier or later than age 65 will not change the size or effective date of your Teachers’ pension reduction. (However, the Teachers’ pension reduction applies as soon as a pensioner begins a CPP disability pension or a Teachers’ survivor pension.)
CPP provides unreduced retirement pensions
CPP provides an unreduced retirement pension at age 65 or a reduced pension as early as age 60. The reduction is 6% a year, or 0.5% per month, that you are under age 65.
The maximum annual CPP pension payable at 65 is about $10,600, fully indexed to inflation. A typical career teacher who collects reduced CPP benefits at 60 can expect an annual CPP pension of about $5,800.
You should apply for your CPP pension six months before you want it to begin.
OAS provides up to $6,000 a year
Most retired teachers qualify for the maximum pension from Old Age Security (OAS). The maximum is currently about $6,000 a year.
OAS payments, which increase quarterly, begin at 65. There is no opportunity to collect benefits earlier. The government claws back OAS beginning with total net income of about $65,000. (See Is Pension Income Splitting Right for You?, for related information.)
Full OAS benefits usually are available to seniors who have lived in Canada for at least 40 years after age 18. Partial pensions may be available if residency requirements are not met.
Apply for your OAS pension about six months before you turn 65.
Other pensions available to low-income seniors
Few career teachers qualify for other government retirement benefits, such as the Guaranteed Income Supplement, which are available to low-income seniors. If you are collecting OAS benefits and your total income, excluding OAS, is below about $15,200 for single people or as high as a combined $36,500 for some couples, contact the federal government to see if you qualify for other pension benefits. Eligibility is established annually.
Government provides many drugs
Under the Ontario Drug Benefit (ODB) program, you can receive more than 3,300 listed drugs at little cost, beginning the month following your 65th birthday. Listed drugs include many prescription drugs, as well as some nutrition and diabetic testing products, prescribed by physicians and other recognized professionals.
You don’t need to apply for the ODB program. The government automatically covers listed products if purchased from an Ontario pharmacy that is online with the government’s health program. Simply show your Health Card to your pharmacist and tell him or her you now qualify for benefits because you are 65. Deductibles may apply.
Health insurance may end or change
You may face increased insurance fees or changes in coverage when you turn 65. For example, former employers who provide post-retirement medical or dental insurance often end coverage at 65, while some carriers charge higher premiums for hospital accommodation. Make sure you understand any changes that apply to you.
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