OAS Clawback: Should You Really Avoid It at All Costs?

For many Canadians approaching retirement, avoiding the OAS clawback feels like a no-brainer. After all, why let the government reduce your benefits if you can help it?

But here’s what often gets missed:

Chasing clawback reduction at all costs can actually leave you worse off.

Many retirees end up reducing their withdrawals, delaying income, and adjusting their entire plan just to avoid triggering the OAS clawback. And in doing so, they sometimes end up with lower income, higher long-term taxes, and a smaller estate.

First, What Is the OAS Clawback?

The Old Age Security (OAS) clawback, officially the OAS Recovery Tax kicks in once your income goes over $90,997 (as of 2025).

For every dollar above that threshold, the government recovers 15 cents of your OAS benefit. At around $148,000 of net income, your OAS is fully clawed back.

Sounds painful, but it’s not always a big deal. It’s just a partial phase-out. And trying to avoid it at all costs may do more harm than good.

How “Avoiding the Clawback” Can Backfire

We see it all the time: people build their retirement strategy around staying under the OAS threshold, even if that means:

• Delaying RRSP withdrawals and deferring income entirely
• Spending less in their active early retirement years
• Missing out on TFSA growth by drawing from it early
• Structuring withdrawals in a way that increases future taxes

The goal is to pay less tax and “get all your OAS.” But if you end up with less income, higher taxes later, and a smaller after-tax estate… was it worth it?

Max Value Isn’t Always Clawback-Free

This is why Optiml’s Max Value plan doesn’t automatically avoid the OAS clawback. It’s not about avoiding tax for the sake of it, it’s about maximizing your after-tax estate while ensuring you meet your lifestyle needs.

Sometimes, triggering the clawback (partially or even fully) results in:

• Lower lifetime taxes overall
• Better use of RRSPs before forced RRIF withdrawals
• More money left behind for your estate
• Or even just a more comfortable retirement

Optiml runs thousands of calculations behind the scenes to compare these trade-offs and help you choose the plan that gets you closest to your goals, not someone else’s rules of thumb.

The Danger of “One-Size-Fits-All” Advice

Yes, avoiding the clawback can be a smart strategy for some people. But for others, it’s a distraction that leads to more complexity and worse results.

In short: It’s not about avoiding clawback, it’s about optimizing for you.

If your goal is to maximize income, preserve your estate, or find the most tax-efficient path through retirement, you need a strategy that balances all those pieces together.

How to Test Your Own Plan

You can test this for yourself using Optiml. Run your plan using:

• Max Value – to increase your after-tax estate
• Max Spend – to maximize what you can safely withdraw
• Custom Plan – to simulate an OAS-friendly drawdown strategy

You can even ask EVA, our in-tool assistant, to explain exactly why OAS is being clawed back, and how different strategies affect your long-term outcome.

Final Thought

Trying to “get all your OAS back” might feel like a win. But if it leads to less income, higher taxes, or a smaller estate, then you’re not really winning.

Smart retirement planning is about trade-offs and clawback is just one of many. Find the strategy that works best for your goals, not just your tax line.

Log into Optiml to test your plan, compare different strategies, and see whether avoiding OAS clawback really makes the most sense for you.