The Old Age Security (OAS) is a social safety net for seniors. Every Canadian citizen or legal resident will receive monthly payments at age 65. Notably, income is not a factor in determining eligibility for the universal retirement pension. The first payment is the month after a senior turns 65 years old.
Modest benefit
Enrollment in the OAS program is automatic if a senior’s information is sufficient. Otherwise, Service Canada will notify an individual of eligibility and advise them to apply as soon as possible. The maximum monthly OAS pension is a modest $727.67 (January to March 2025), although the figure excludes any government-approved increase in 2025.
Financial incentive
Financial planners say the yearly amount of $8,732.04 will not fully cover living expenses in retirement. Fortunately, the government offers an incentive for seniors to defer OAS payments at a later date or up to five years. The financial reward is a 7.2% increase annually (0.6% per month past 65) and a 36% permanent increase.
By deferring payments, the maximum OAS monthly payment becomes $990 (rounded off from $989.63) at age 70. The difference annually is $3,143.53. It is worth the wait if you’re in good health, expect to live longer, and don’t have urgent financial need.
Retirement accounts
The OAS is just one of the retirement plans in Canada. Seniors can further boost their retirement incomes (OAS + Canada Pension Plan) by utilizing retirement accounts like the Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA). Using the yearly contribution limits of either account or both to purchase dividend stocks will produce additional passive income streams.
Cash cow
One dividend payer with positive signals in 2025 is Diversified Royalty Corp (TSX:DIV). The $491.2 million company collects royalties from eight royalty partners led by Mr. Lube. It also owns the AIR MILES, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions, and BarBurrito trademarks.
At only $2.96 per share, the dividend yield is a lucrative 8.44%. Assuming you maximize the 2025 TFSA limit, a $7,000 investment in DIV will generate $590.80 per year. Since the payout frequency is monthly, you’ll receive $49.23 in tax-free monthly passive income.
Diversified Royalty paid its first dividend in November 2014 and hasn’t missed a payment since. Management said the companies in the royalty pool deliver predictable, growing royalty streams and support dividend payments.
Solid investment
Aecon Group (TSX:ARE) in the engineering and construction industry is a solid investment choice for capital growth and recurring dividend income. At $27.05 per share, the trailing one-year price return is +112.74%, while the dividend offer is a decent 2.81%.
The $1.7 billion infrastructure company handles construction and development projects in Canada. Given the $6.0 billion backlog at the end of Q3 2024 and the strong demand for its services, Aecon is assured of revenue growth in 2025 and over the next few years. Its president and chief executive officer, Jean-Louis Servranckx, said Aecon operates under more collaborative project delivery models in established markets.
Income for life
The OAS (and CPP) benefit is income for life but not necessarily adequate to live comfortably in the sunset years. Fortunately, in addition to delaying the OAS payment, Canadian seniors can boost retirement income in other ways.
