If you worked on both sides of the border, you may be entitled to government retirement income from both countries. A surprising number of people never claim what they earned, for a very ordinary reason: a few years of work in the other country did not feel like enough to count.
It frequently is.
There are three systems in play, an agreement between the two countries that connects them, a treaty that decides who taxes what, and one significant rule change that has not fully filtered through yet. Here is how they fit together.
Table of Contents
The three systems, briefly
Canada Pension Plan. A contributory plan. You pay in through payroll while working in Canada, and what you get out depends on how much and how long you contributed. You can start it as early as 60 at a permanent reduction, or as late as 70 at a permanent increase. It is payable anywhere in the world.
Old Age Security. Not contributory. It is based on how long you have lived in Canada after age 18. Full OAS generally requires 40 years of residence, with partial amounts for shorter periods. To receive it outside Canada you generally need at least 20 years of Canadian residence after 18. If you have fewer, payments typically stop after you have been outside Canada for six months plus the month you left. OAS is also subject to a recovery tax at higher income levels, which matters more than people expect for cross border households with two pensions.
U.S. Social Security. Contributory, funded by payroll taxes. You generally need 40 credits, which is about ten years of covered work, to qualify for a retirement benefit. Claiming can start at 62 at a reduced amount, at full retirement age for the full amount, or as late as 70 for delayed credits.
The Totalization Agreement, which is the part people miss
Canada and the United States have had a social security agreement since 1984. It does two useful things.
It prevents double contributions. If you are sent to work temporarily in the other country, you generally keep contributing to your home system rather than paying into both.
And this is the important one: it lets you combine periods of coverage in the two countries to qualify for a benefit.
That means someone with, say, six years of U.S. covered work, who never reached the forty credit threshold and assumed that money was simply gone, may be able to count Canadian contributions toward eligibility. The benefit itself is then calculated on the U.S. work alone, so it is proportionate rather than full, but proportionate is a great deal better than nothing.
The same principle runs the other way for CPP eligibility.
This is worth saying plainly because it is the single most common piece of unclaimed money we see in cross border households. People write off short stints in the other country. Those stints often still count for qualifying.
Who taxes what
Once the money starts, the Canada U.S. tax treaty decides which country gets to tax it, and the answer is cleaner than most cross border tax questions.
Social security benefits are taxable only in the country where the recipient lives.
For a Canadian resident receiving U.S. Social Security, IRS Publication 597 puts it directly: the benefits are taxed in Canada as if they were Canada Pension Plan benefits, except that 15% of the amount is exempt from Canadian tax. So Canada can tax up to 85% of it, and the U.S. does not tax it at all.
The treaty provides corresponding treatment in the other direction for CPP and OAS paid to a U.S. resident, taxable only in the United States with the same 15% relief.
Two practical consequences.
You generally do not need a foreign tax credit for social security income, because only one country is taxing it. That is unusual and it simplifies things considerably.
And where you are resident when you claim genuinely changes your after tax income. This is one of the few areas where the residency decision has a direct, calculable effect on the cheque.
The Windfall Elimination Provision, and why this section matters
For decades, the Windfall Elimination Provision reduced U.S. Social Security for people who also received a pension from employment not covered by U.S. Social Security. Foreign pensions counted, and that explicitly included CPP and QPP.
So a great many people who worked in both countries received a smaller U.S. benefit than their U.S. earnings record suggested, because they also had Canadian pension income. A related rule, the Government Pension Offset, reduced spousal and survivor benefits on the same logic.
Both were repealed by the Social Security Fairness Act, signed on 5 January 2025.
That is a material change and it is worth checking where you stand, for three reasons.
If you were reduced under WEP, your benefit should no longer be. Implementation took time and ran well into 2026, and not everyone affected was easy for the Social Security Administration to identify, particularly people living outside the United States.
If you were reduced under GPO as a spouse or survivor, the same applies.
And if you previously decided not to claim a small U.S. benefit because WEP made it barely worth the paperwork, that calculation may have changed.
Anyone who worked in both countries and is either receiving or approaching U.S. Social Security should confirm their current position rather than assume the old numbers still apply.
Sequencing, which is where the planning value sits
Having established what you are entitled to and who taxes it, the remaining question is when to turn each one on. This is where the real money is, and it is the part almost nobody plans deliberately.
Each system has its own timing curve. CPP rewards waiting to 70. U.S. Social Security rewards waiting to 70. OAS can be deferred to 70 as well. But they do not have to be claimed together, and claiming them in different years changes your taxable income profile in each of those years.
Several things interact:
The OAS recovery tax. A household with two pensions and investment income can easily reach the threshold where OAS starts being clawed back. Sequencing withdrawals and benefit start dates around that is a genuine planning exercise.
Registered account drawdowns. The years before benefits start are often the lowest income years of a retirement, and low income years are exactly when RRSP or IRA withdrawals, and Roth conversions where relevant, are cheapest.
Currency. If one benefit arrives in U.S. dollars and your costs are in Canadian dollars, the exchange rate is a live variable in your income, not a footnote.
Survivorship. Delaying the larger benefit generally produces a better outcome for a surviving spouse. In a cross border household the larger benefit may be the foreign one, which people rarely think about in those terms.
None of this can be optimised by looking at any single benefit in isolation, which is precisely how it usually gets looked at.
A short worked example
Consider a couple who worked eight years in Chicago in their thirties and the rest of their careers in Vancouver, and who plan to retire in British Columbia.
They assumed the U.S. years were a write off. Under the totalization agreement, those eight years can count toward U.S. eligibility, producing a proportionate U.S. benefit.
That benefit is taxable only in Canada, with 15% exempt.
One of them was told years ago that WEP would reduce it. That reduction no longer applies.
And because they are retiring at 62 with a bridge to fund before CPP and OAS start, the years between 62 and 70 become the cheapest years they will ever have for drawing down registered accounts.
Nothing in that example is exotic. It is four ordinary facts that nobody had put on the same page.
Your checklist
Request your Social Security Statement from ssa.gov and your CPP Statement of Contributions from Service Canada. Get both, in writing, before doing any planning.
Count your years of Canadian residence after 18, for OAS.
If you have fewer than 40 U.S. credits, ask specifically about totalization rather than assuming you do not qualify.
If you were ever reduced under WEP or GPO, confirm your current benefit reflects the repeal.
Model the start dates together rather than separately, alongside your registered account drawdown and, if it applies, the OAS recovery tax.
And do this while you still have time to act on it. Most of the levers here are timing levers, and timing levers only work in advance.
Where we fit
Sartorial Wealth does not prepare tax returns and does not file benefit applications. Your accountant handles the filings, and the applications go to Service Canada and the Social Security Administration.
What we do is the modelling. What arrives, from where, starting when, taxed by whom, and in which currency. Then what the portfolio has to do in the years before it all switches on, and how the drawdown sequence works around it.
Being registered in both countries is what lets us look at the whole picture rather than half of it.
Common questions
Can I collect both CPP and U.S. Social Security?
Yes. They are separate systems and entitlement to one does not disqualify you from the other. If you worked in both countries you may well qualify for both, and the totalization agreement can help you qualify where your years in one country alone fall short.
Is my U.S. Social Security taxable in Canada?
It is taxable only in Canada if you are a Canadian resident, not in the U.S., and 15% of the amount is exempt from Canadian tax. So Canada taxes up to 85% of it.
Is the Windfall Elimination Provision still in effect?
No. WEP and the Government Pension Offset were repealed by the Social Security Fairness Act, signed on 5 January 2025. If your benefit was reduced under either, it is worth confirming your current amount reflects the repeal, because implementation took time and people outside the U.S. were harder to reach.
What if I do not have 40 U.S. credits?
Ask about the totalization agreement before assuming you are ineligible. Periods of Canadian coverage can count toward U.S. eligibility. The resulting benefit is proportionate to your U.S. work, not a full benefit, but it is real money that many people never claim.
Can I receive OAS if I live in the United States?
Generally yes, if you have at least 20 years of Canadian residence after age 18. With fewer than 20 years, payments typically stop after six months of absence plus the month you left.
Should I take CPP at 60 or wait?
It depends on the rest of the picture, and in a cross border household it depends on more variables than usual: the other country’s benefit, the OAS recovery tax, your registered account drawdown, and which spouse’s benefit is larger for survivorship. There is no general answer, which is exactly why it is worth modelling.
Sources
Internal Revenue Service, Publication 597, Information on the United States-Canada Income Tax Treaty. https://www.irs.gov/publications/p597
Social Security Administration, Social Security Fairness Act: Windfall Elimination Provision and Government Pension Offset Update. https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html
Social Security Administration, Totalization Agreement with Canada. https://www.ssa.gov/international/Agreement_Pamphlets/canada.html
Government of Canada, Old Age Security: Do you qualify. https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/eligibility.html
Government of Canada, Canada Pension Plan: When to start your retirement pension. https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/when-to-start.html
Disclaimer
Sartorial Wealth Inc. is a registered Portfolio Manager in Canada (ON, QC, AB, BC, NT, NS, SK, NB, NL) and an SEC-registered investment adviser. Content is for informational purposes only and does not constitute investment, legal, tax, or insurance advice. Investing involves risk; past performance is not indicative of future results. Services are only offered where properly registered. See full disclosures at https://sartorialwealth.com.
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