k → ∞ Capital Closure
⚠️ This game is for educational purposes. It is not accurate nor does it take into account Tax Issues that are too circumstantial for such a simulation.

Welcome to Capital Closure

🎯 Game Objective

Maximize your income after OAS clawbacks by making strategic decisions about when to start CPP and OAS, and how to invest your lump sum.

📋 Background

You are 60 years old and have just retired. You have lived in Canada for over 40 years and are unwilling to work anymore. You have earned the right to CPP benefits and will be eligible for OAS at 65.

💼 Your Choices

  • When to start CPP: Delay from age 60 to 70 for higher benefits
  • When to start OAS: Delay from age 65 to 70 for higher benefits
  • How to invest your lump sum: Choose between 10-year annuities and life annuities at different ages

📊 CPP Rules

  • Gain 0.6% per month delay from 60-65 (42.6% total at 65)
  • Gain 0.7% per month delay from 65-70 (additional 42% at 70)
  • All payments indexed to inflation (CPI) annually

🏛️ OAS Rules

  • Gain 0.6% per month delay from 65-70 (36% total at 70)
  • Get 10% top-up after age 75
  • Payments indexed to inflation (CPI) quarterly
  • Subject to clawback: 15% of income above threshold (updated annually)

💰 Annuity Options

  • 10-Year Annuity: Fixed payments for 10 years, can be reinvested
  • Life Annuity at 60: Payments for life, gender-specific rates
  • Life Annuity at 70: Higher monthly payments, shorter expected duration
  • Life Annuity at 80: Highest monthly payments, shortest expected duration

How to Play — Capital Closure

🎯 Game Objective

Maximize your total cashflow after OAS clawbacks by making strategic decisions about when to start CPP and OAS, and how to invest your lump sum. Your lifetime is secretly determined at the start — you won't know when you'll die!

📋 Your Starting Situation

It's July 1st, your 60th birthday. You've lived in Canada 40+ years, are done working, and have:

  • Monthly CPP (MC): Your earned CPP benefit if taken at 60
  • Monthly Pension (PI): Fixed pension/RRIF income each month
  • Lump Sum (LS): Cash to invest in annuities

📊 CPP Rules

You can start CPP anytime from age 60 to 70:

  • Age 60-65: Gain +0.6% per month delayed (up to +42% at 65)
  • Age 65-70: Gain +0.7% per month delayed (up to +84% at 70!)
  • Adjusted for inflation annually every January
CPP Payment = MC × (1.006)months delayed 60-65 × (1.007)months delayed 65-70

🏛️ OAS Rules

You can start OAS anytime from age 65 to 70:

  • Age 65-70: Gain +0.6% per month delayed (up to +36% at 70)
  • Age 75+: Get an extra 10% top-up
  • Adjusted for inflation quarterly (Jan, Apr, Jul, Oct)
  • OAS payments never decrease even if inflation goes negative
OAS Payment = MO × (1.006)months delayed × 1.1 (if age 75+)

⚠️ OAS Clawback (Recovery Tax)

If your annual income exceeds the OAS threshold, you lose some OAS:

  • Clawback Rate: 15% of income above threshold
  • Applied monthly as: (Annual Income − Threshold) × 0.0125
  • Based on prior year's income, applied July to June
  • Threshold is inflation-adjusted annually
Monthly Clawback = min[(Net Income − Threshold) × 1.25%, OAS Payment]

💰 Annuity Options

10-Year Ordinary Annuity

Per $100,000 invested, receive $1,060/month for 10 years:

  • Taxable portion decreases each year (more is return of capital)
  • At ages 70 and 80, choose to reinvest or buy a life annuity
  • If you keep reinvesting, continues at ages 90, 100, 110...

Life Annuity (per $100,000)

Age Male $/mo Female $/mo Taxable %
60 $533.66 $513.38 33.3% / 38.5%
70 $660.97 $617.24 18.7% / 25.0%
80 $943.61 $837.01 1.9% / 7.0%

Life annuities pay until death. Higher age = higher payment but shorter expected duration.

📅 Timeline Reference

Month Age Calendar Month Events
1 60.0 July Game starts, OAS adjusts
7 60.5 January CPP adjusts, OAS adjusts
61 65.0 July OAS eligible
121 70.0 July Last CPP/OAS start date
181 75.0 July OAS 10% top-up begins
241 80.0 July Age 80 annuity option

📈 Understanding Results

  • Total Income: Taxable income (affects clawbacks)
  • Total Cashflow: Actual money in your pocket
  • 10Y Tax vs 10Y Cash: Taxable portion vs full payment
  • L60/L70/L80: Life annuity cashflows by purchase age

🎮 Strategic Tips

  • 🎲 Your death is random — longer life favors delayed benefits
  • 💸 Watch the clawback threshold — high income = lost OAS
  • 📊 Life annuity at 60 = steady income but lower payments
  • 🔄 10-year + reinvest = flexibility but may outlive it
  • ⏰ Delaying CPP to 70 gives +84% but you get fewer payments
  • 👴 If you expect to live long, delay benefits and use life annuities
  • ⚡ If uncertain, balanced approach: start CPP at 65, OAS at 65-67

🔢 Quick Math Examples

CPP at 70: $1,000 × 1.00660 × 1.00760 = $2,098/mo
OAS at 70: $728 × 1.00660 = $990/mo (before 75+ bonus)
Clawback: If income = $120,000 and threshold = $97,000:
→ Monthly clawback = ($120,000 − $97,000) × 0.0125 = $287.50