Christopher Liew: Delayed retirement is on the rise. Here’s how to make the most of it

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Christopher Liew is a CFP®, CFA Charter holder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers at Blueprint Financial.

For decades, 65 was the finish line. You worked, you saved, you retired. But that script is quietly being rewritten across the country.

A new Statistics Canada analysis released last month shows more Canadians than ever are staying on the job past 65. For some, it’s a necessity, for others it’s a choice, but either way, the trend is here.

Done right, those extra working years can dramatically improve the rest of your life. Below, I’ll walk through how to turn working a few extra years into one of the smartest financial moves you’ll ever make.

A quick look at the numbers

According to Statistics Canada, the labour force participation rate for Canadians aged 65 and older hit 15.2 per cent in 2025, the fifth consecutive annual increase and the highest on record since the Labour Force Survey began tracking it in 1976. That’s nearly 1.2 million seniors in the labour force.

The average retirement age also climbed to a record 65.4 years in 2025, up from a low of 60.9 in 1997. Self-employed Canadians retire even later, at an average of 68.4.

So what’s driving it? Higher living costs, longer life expectancy, and frankly, a lot of people who like what they do and aren’t ready to stop. Whatever the reason, the financial upside of working a few more years is significant if you plan it right.

1. Boost your CPP and OAS by waiting

This is the single biggest lever most Canadians ignore. According to the Government of Canada, every month you delay your Canada Pension Plan (CPP) retirement pension past the age 65 increases your payment by 0.7 per cent. Wait until 70 and you’ll get a permanent 42 per cent boost.

Old Age Security (OAS) works the same way, but at 0.6 per cent per month, for a maximum 36 per cent permanent increase at 70. If you’re working past 65 and don’t need the income yet, deferring is almost always worth a serious look.

I broke this down recently in a Blueprint Financial video on average CPP benefits in 2026. The short version: most Canadians don’t get the maximum CPP, but every extra month of work and deferral closes that gap.

2. Avoid the OAS clawback while you’re still earning

If you’re earning a good income past 65, taking OAS at the same time can backfire. For the July 2026 to June 2027 benefit year, OAS starts to claw back once your net income hits $93,454, and disappears entirely around $152,000 if you’re aged 65 to 74.

Deferring OAS to 70 not only avoids the clawback during your highest-earning years, it also gives you a larger, inflation-indexed cheque later when your income drops. It’s one of the cleanest tax wins available to working seniors.

3. Keep building your RRSP and TFSA

Working longer means more contribution room and more time for tax-sheltered growth. You can keep contributing to your Registered Retirement Savings Plan (RRSP) until Dec. 31 of the year you turn 71. And since your Tax-Free Savings Account (TFSA) limit keeps accumulating regardless of work status, every extra year of earnings is a chance to top it up.

I’ve always thought this is one of the most underrated benefits of working past 65. A 67-year-old maxing out their TFSA and adding to a spousal RRSP can quietly add tens of thousands in tax-sheltered savings before they even start drawing down. As I recently wrote for CTVNews.ca, these accounts remain the backbone of tax-efficient saving in Canada.

4. Use the pension income tax credit

If you’re 65 or older, you can claim a non-refundable federal tax credit on up to $2,000 of eligible pension income, plus a matching provincial credit. Working seniors often forget this one because they’re still drawing a paycheque.

The trick is making sure you generate at least $2,000 in eligible pension income each year, whether through a Registered Retirement Income Fund (RRIF) withdrawal, an annuity, or a workplace pension. Done right, it’s essentially free tax savings every year you qualify.

5. Phase in your retirement instead of stopping cold

Retirement doesn’t have to be a hard switch. A growing number of Canadians are moving to part-time work, consulting, or seasonal gigs in their late 60s. Wage growth for workers 55 and older actually outpaced every other age group in March 2026, at 5.2 per cent year-over-year, according to the Labour Force Survey. Older workers aren’t just hanging on, they’re being rewarded.

A phased approach also lets you ease into your spending plan, test your retirement budget, and reduce the risk of drawing too much too early.

Final thoughts

Delayed retirement isn’t always a setback. It’s a planning opportunity that can leave you with a bigger pension, a stronger portfolio, and a smoother transition out of full-time work. Defer your CPP and OAS where it makes sense, keep using your registered accounts, and consider phasing out instead of stopping cold. If you’re going to work a few extra years anyway, you may as well get paid twice for them.

Read more from Christopher Liew:

• How much should you have saved to retire at 60?
• How to prepare amid the mortgage renewal wave
• How to talk to your aging parents about money before it’s too late
• What happens if you missed the tax deadline in Canada?
• How Trump tariffs could affect Canadian stocks and investments