Canadian Retirement FAQ

You can start CPP as early as age 60 or as late as age 70. Starting before age 65 permanently reduces your benefit by 0.6% for every month before your 65th birthday — a maximum reduction of 36% at age 60. Starting after 65 permanently increases your benefit by 0.7% per month, up to a 42% increase at age 70. The decision is irreversible once made. Use our CPP Deferral Calculator to see the numbers for your situation.

Most Canadians aged 65 and older qualify for OAS regardless of their work history. To receive the full pension, you must have lived in Canada for at least 40 years after age 18. If you have lived in Canada for fewer than 40 years, you receive a pro-rated amount. OAS is available to Canadian citizens and legal residents, and can also be paid to Canadians who have moved abroad if they lived in Canada for at least 20 years after age 18. Learn more about OAS.

Your RRSP must be converted by December 31 of the year you turn 71. The most common option is converting to a RRIF, which requires mandatory annual withdrawals beginning the following year. You can also use the funds to purchase a life annuity, or take the full balance as a lump sum — though the latter triggers significant income tax. You can convert earlier than 71 if you want to begin drawing retirement income sooner. Learn more about RRIFs.

If you have been eligible since 2009 and have never contributed, your total TFSA room in 2025 is approximately $95,000. The annual contribution limit in 2025 is $7,000. Unused room carries forward indefinitely. Withdrawals are added back to your contribution room on January 1st of the following year. Check your exact room in your CRA My Account. Learn more about TFSAs.

A LIRA — Locked-In Retirement Account — holds pension money transferred from a former employer's registered pension plan. The funds are locked in because they were originally intended to provide retirement income under pension legislation. You generally cannot withdraw from a LIRA freely until retirement, when it must be converted to a Life Income Fund (LIF). Some provinces allow partial unlocking under specific conditions such as small balances or financial hardship. Learn more about LIRAs.

For most Canadians in good health, deferring CPP to 70 is one of the highest-return financial decisions available. The break-even age between starting at 65 versus 70 is approximately age 82 to 83. If you live past that age, deferring generates more lifetime income — permanently and indexed to inflation. The decision depends on your health, other income sources, and whether you have assets to draw from while you wait. Model your numbers with our calculator.

For most retirees, drawing from your RRIF first and preserving your TFSA is the conventional approach — but it depends on your income level. RRIF withdrawals are taxable and count toward OAS clawback. TFSA withdrawals are completely tax-free and do not affect OAS or GIS. If your income is near the OAS clawback threshold, shifting withdrawals to your TFSA can preserve thousands of dollars in OAS annually. The optimal order is specific to your income level and tax situation. Check your OAS clawback risk.

This is one of the most consequential and irreversible retirement decisions a Canadian can make. The monthly pension provides guaranteed lifetime income, survivor benefits, and often inflation indexing — and transfers all longevity risk to the plan. The commuted value gives you a lump sum (transferred to a LIRA) with flexibility and potential estate value, but shifts all investment and longevity risk to you. The right answer depends on your health, other income sources, the size of the commuted value, and whether the pension is indexed. Learn more about commuted values.

Several strategies can reduce RRIF tax burden over your lifetime. Converting your RRSP to a RRIF before age 71 and taking voluntary withdrawals at lower tax rates — sometimes called an RRSP meltdown — reduces the future balance and therefore future mandatory withdrawals. Pension income splitting with a spouse can shift up to 50% of eligible RRIF income to a lower-income partner. Using your spouse's younger age for RRIF minimum calculations also reduces required withdrawals. Use our RRIF Calculator to model your schedule.

The commonly cited 70% income replacement rule is a rough starting point — not a reliable target. The more accurate approach is to start with what you want your retirement to cost, then work backwards. Guaranteed income sources like CPP, OAS, and a DB pension directly reduce the portfolio you need. A retiree with $30,000 per year in guaranteed income needs far less in savings than one with none. The right number is specific to your spending, income sources, and retirement age. Use our Income Layering Tool to visualize your picture.

The OAS recovery tax begins at net income of $90,997 in 2025. For every dollar above that threshold, 15 cents of OAS is clawed back. OAS is fully eliminated at approximately $148,451. The threshold is adjusted annually for inflation. RRIF withdrawals are one of the most common triggers — particularly as mandatory minimums grow larger in your 70s and 80s. TFSA withdrawals do not count toward the threshold. Estimate your clawback risk.

Pension income splitting is a federal tax election that allows you to transfer up to 50% of eligible pension income to your spouse on paper — no money actually moves. Both spouses file Form T1032 with their tax returns. Eligible income includes RRIF withdrawals for those aged 65 and older and life annuity payments from a registered pension plan. CPP and OAS are not eligible for this election. The strategy can significantly reduce OAS clawback exposure and lower the household's combined tax bill. Learn more about pension income splitting.

No. TFSA withdrawals are not taxable income and are not included in net income for any federal benefit calculation. They do not affect OAS clawback, GIS eligibility, or the age amount tax credit. This is one of the most important features of the TFSA in retirement — it gives you a source of tax-free income that does not trigger any income-tested reductions. Learn more about TFSAs.

Yes — this is one of the most overlooked retirement planning traps. GIS eligibility is based on your prior-year net income. RRIF withdrawals are fully taxable and count toward the GIS income test. A large RRIF withdrawal in one year can reduce or eliminate your GIS payments the following year. For retirees near the GIS threshold, coordinating RRIF withdrawals with TFSA use and CPP timing is essential to preserve eligibility. Learn more about the GIS.

Yes. CPP payments are fully taxable as income in the year received. You can request that CRA withhold tax from your CPP payments throughout the year by submitting a TD1 form to Service Canada — otherwise you may owe a lump sum at tax time. CPP income also counts toward the OAS clawback threshold, which is relevant if your total retirement income is near $90,997. Learn more about CPP.

If you have named your spouse or common-law partner as beneficiary, the RRIF can roll over to their RRIF tax-free — no immediate tax consequence. If the beneficiary is anyone other than a spouse (such as a child or the estate), the full fair market value of the RRIF is included in your income on your terminal tax return. This can generate a very large tax bill. Naming a spousal beneficiary and ensuring your beneficiary designations are up to date is one of the most important estate planning steps for RRIF holders. Learn more about RRIFs.

In Ontario, the estate administration tax is $15 per $1,000 (1.5%) on estate assets above $50,000. There is no fee on the first $50,000 and a reduced rate below that. Assets with named beneficiaries — including RRSPs, RRIFs, TFSAs, and life insurance — bypass probate entirely and pass directly to the beneficiary. Jointly held assets with right of survivorship also bypass probate. Strategic use of beneficiary designations can significantly reduce your estate's probate exposure. Learn more about probate.

A will takes effect after death and governs how your assets are distributed. A power of attorney (POA) takes effect during your lifetime if you become incapacitated and cannot make decisions for yourself. There are two types: a POA for Property (financial decisions) and a POA for Personal Care (healthcare and living decisions). Both documents are necessary for complete estate planning — having one without the other leaves significant gaps. A POA must be created while you still have mental capacity. Learn more about powers of attorney.

If you have named a successor holder (your spouse) or a designated beneficiary on your TFSA, the funds pass directly to that person outside the estate — bypassing probate entirely. If no beneficiary is named, the TFSA forms part of your estate and is subject to probate fees and potential delays. Naming a successor holder is the most efficient option for spouses because it also preserves the tax-free status of the account. Learn more about TFSAs.

Not everyone does — but they are more useful than most people realize. A testamentary trust is created through your will and comes into effect at death. It is most valuable when you have a disabled beneficiary (to preserve government benefits using a Henson Trust structure), minor children, a blended family where you want to protect children from a first marriage, or a beneficiary who cannot manage money independently. The trust also qualifies as a Graduated Rate Estate for the first 36 months, which can reduce taxes on estate income. Learn more about testamentary trusts.