CPP and OAS Together: Your Guaranteed Retirement Income Floor
When CPP and OAS stack together, most Canadians already have a guaranteed income floor that makes their XEQT portfolio do far less heavy lifting than they think.
What Is a Retirement Income Floor?
An income floor is guaranteed monthly income that arrives no matter what the market does. CPP and OAS are yours.
A lot of Canadians spend years agonizing over how big their XEQT portfolio needs to be before they can retire. They run numbers, panic when markets dip, and wonder if they will ever have enough. Here is what most of them miss: they already have two government-backed income streams waiting for them, and those streams cover a meaningful chunk of basic living costs before they withdraw a single dollar from their portfolio.
CPP, the Canada Pension Plan, pays you every month for the rest of your life based on what you contributed during your working years. OAS, Old Age Security, pays you every month starting as early as age 65 just for being a Canadian resident long enough. Together, they form a guaranteed income floor. That floor changes the entire math of retirement investing.
The bigger your guaranteed income floor, the less you need to withdraw from XEQT each year. That means less sequence-of-returns risk, less stress during market downturns, and a longer runway for your portfolio to recover.
CPP and OAS Amounts in 2026
Real numbers matter. Here is exactly what CPP and OAS pay in 2026 so you can plan with actual figures, not vague estimates.
The government adjusts CPP and OAS each year. For 2026, here are the key figures you need. Note that most Canadians receive less than the maximum CPP because the maximum requires contributing at or near the earnings ceiling for most of your career. The average new CPP recipient in 2025 collected around $815 per month, and that number is your most honest planning baseline.
| Benefit | At 65 (Maximum) | At 65 (Avg CPP) | At 70 (Maximum) |
|---|---|---|---|
| CPP | $1,364/mo | $815/mo | $1,937/mo |
| OAS | $727/mo | $727/mo | $988/mo |
| Combined (max) | $2,091/mo | N/A | $2,925/mo |
| Combined (avg CPP + max OAS) | $1,542/mo | $1,542/mo | ~$1,803+/mo |
Even at average CPP plus maximum OAS, you are looking at roughly $1,542 per month in guaranteed income at age 65. That is $18,504 per year arriving without selling a single unit of XEQT. For many Canadians, especially those with modest lifestyles or a paid-off home, that number covers the basics.
Taking Benefits at 65 vs. 70: The Trade-Off
Delaying CPP to 70 adds 42 percent to your payment forever. That is a powerful raise, but it is not the right call for everyone.
Every year you delay CPP past 65, your payment grows by 8.4 percent. Delay from 65 to 70 and you pocket a 42 percent permanent raise. OAS grows by 7.2 percent per year you delay past 65, adding up to 36 percent if you wait until 70. These are not small numbers.
| Scenario | Monthly CPP | Monthly OAS | Combined Monthly | Combined Annual |
|---|---|---|---|---|
| Start at 65 (max CPP) | $1,364 | $727 | $2,091 | $25,092 |
| Start at 70 (max CPP) | $1,937 | $988 | $2,925 | $35,100 |
| Difference | +$573 | +$261 | +$834/mo | +$10,008/yr |
Delaying to 70 gives you an extra $834 per month at the maximum level. If you live to 85 or beyond, the lifetime math almost always favours waiting. The break-even point for CPP delay is typically around age 82 to 84. If your family has a history of longevity and you are in good health, delaying is usually the better financial move.
But here is the nuance: if you retire at 60 or 65 and have no other income, waiting until 70 to start CPP means drawing down your XEQT portfolio for those extra years. That trade-off is real. You are spending portfolio assets in exchange for a higher guaranteed income later. For many people, especially those who worried about running out of money late in life, that exchange is worth it.
How the Income Floor Reduces Pressure on Your XEQT Portfolio
Every dollar of guaranteed income is a dollar you do not have to pull from XEQT during a market crash. That is the real power of the floor.
Sequence-of-returns risk is the biggest threat to a retirement portfolio. It means that if markets drop sharply in your first few years of retirement and you keep withdrawing at the same rate, you can permanently damage your portfolio’s ability to recover. Selling XEQT units when prices are low locks in losses. The more you need to sell, the worse the damage.
A strong CPP and OAS floor attacks that problem directly. If your basic living costs run $4,000 per month and your guaranteed income covers $2,000 of that, you only need to pull $2,000 from XEQT. During a bad market year, that reduced withdrawal rate makes an enormous difference to how long your portfolio survives.
Assume you need $4,000 per month in retirement. With $1,800 in CPP and OAS combined, you only withdraw $2,200 from XEQT. At a $500,000 portfolio that is a 5.3% withdrawal rate without the floor vs. a much safer 5.3% total need dropping to roughly 2.6% portfolio-only. The floor nearly cuts your portfolio dependency in half.
This is why the JustBuyXEQT approach works so well for Canadian retirees. You do not need to engineer a complicated bond ladder or buy annuities. The government already built you a guaranteed base. XEQT sits on top of that base and handles the growth and inflation-beating work.
OAS Clawback: The One Catch Worth Knowing
If your retirement income climbs above $90,997 in 2026, the CRA starts clawing back your OAS. Most Canadians never get close to that number, but you should know it exists.
The OAS clawback, officially called the OAS recovery tax, kicks in when your net income for the year exceeds $90,997 in 2026. For every dollar above that threshold, you repay 15 cents of OAS. Your OAS payment hits zero at around $148,000 of income. If you combine CPP, RRIF withdrawals, rental income, and XEQT distributions in a non-registered account, it is possible to breach that threshold, but it takes real income to get there.
The practical implication for XEQT investors: think about which accounts you draw from first in retirement. Drawing from your TFSA does not count as taxable income. Keeping XEQT distributions sheltered inside your TFSA and pulling from there during high-income years can protect your OAS payment. This is not complicated tax planning, it is just account sequencing.
A Real Retirement Scenario with CPP, OAS, and XEQT
Numbers in a table are abstract. Here is what the income floor looks like for a real Canadian couple.
Meet Diane and Paul. Both are 65. Diane contributed consistently to CPP for 30 years and expects $900 per month. Paul contributed for 35 years and expects $1,100 per month. Both qualify for maximum OAS at $727 per month each. Their combined guaranteed income floor at 65 looks like this:
| Source | Diane | Paul | Combined Monthly |
|---|---|---|---|
| CPP | $900/mo | $1,100/mo | $2,000/mo |
| OAS | $727/mo | $727/mo | $1,454/mo |
| Total Guaranteed | $1,627/mo | $1,827/mo | $3,454/mo |
Diane and Paul have $3,454 per month guaranteed before they touch a single unit of XEQT. Their lifestyle costs run about $5,500 per month, which includes their mortgage-free home expenses, travel, and some splurging. They need $2,046 per month from their XEQT portfolio. On a $400,000 XEQT portfolio, that is a 6.1 percent annual withdrawal rate, which is on the higher side. But if they delay CPP just two more years each to 67, their combined CPP climbs by roughly $336 per month, and the withdrawal rate drops to a very comfortable level.
This is the conversation most Canadians never have. They stare at portfolio size targets without accounting for the guaranteed income already baked into their retirement. The floor changes everything.
The Simple Path Forward
You do not need a financial advisor to optimize this. You need a clear plan and the discipline to follow it.
Here is the simple version: estimate your CPP and OAS using the My Service Canada Account tool. Decide whether your health and financial situation supports delaying to 70 or taking benefits earlier. Subtract your guaranteed income from your expected retirement spending. Whatever gap remains is what your XEQT portfolio needs to cover. Then build toward that number.
The beauty of this framework is that it removes most of the anxiety around retirement investing. You are not guessing what the market will do. You are building on a guaranteed foundation and letting a globally diversified, low-cost ETF like XEQT handle the rest. That is as simple as Canadian retirement planning gets.
For a deeper look at the full CPP picture, including how contributions work, survivor benefits, and disability provisions, head to the main CPP guide where everything lives in one place.
Start Building the Portfolio That Sits on Top of Your Income Floor
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Open Wealthsimple → Get $25 FreeThis article is for general informational purposes only and does not constitute personalized financial or investment advice. XEQT is a product of BlackRock/iShares. Not financial advice. This site maintains an affiliate relationship with Wealthsimple.