What retirees need to know if they plan to defer Old Age Security benefits until 70 | General financial discussion | Discussion forum

From Jonathan Chevreau in the Financial Post (NP) -

What retirees need to know if they plan to defer Old Age Security benefits until 70

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While deferral covers off longevity risk, life expectancy may be shorter than you imagine.

Hector cites the hypothetical case of “Mr. Smith,” who deferred OAS to 70 on the expectation he’d live till 95, his parents still being alive. But at 67 he was diagnosed with a medical condition and his doctor advised a shortened life span.

What can Smith do now? Hector says he can request an effective OAS start date that predates the original application date. Service Canada lets you go back 12 months and will send you a lump sum for the retroactive payment. If Smith applied for OAS the day he turned 67, he’d be paid a retroactive lump sum for the one year, and after that would receive monthly payments enhanced by 7.2 per cent (12 months x 0.6 per cent per month).

But what if Smith dies at 67? Then his estate/survivor can take advantage of some little-known provisions of the OAS Act. His executor can apply to begin Smith’s OAS pension with the effective starting date set as one year prior to the date of death. Keep in mind that OAS payments always end on death: our concern here is merely the opportunity to collect for the one year prior to death.

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https://business.financialpost.com/personal-finance/retirement/what-retirees-need-to-know-if-they-plan-to-defer-old-age-security-benefits-until-70