There’s one very important RRSP timing decision that can affect your CPP, your taxes, and whether your money actually lasts through retirement.
We see this all the time when building financial plans for our clients at Blueprint—
And making the wrong call can shorten the life of your retirement savings by several years.
If you have an RRSP, this is something you absolutely need to consider.
I’ll walk you through exactly how it works using real scenarios in our financial planning software—but first…
🎯 Core Goal of Retirement
Unless you’re already quite wealthy going into retirement, your number one goal in retirement shouldn’t be chasing high returns.
The golden rule of retirement, is to make sure you don’t run out of money while you’re still alive.
And yet, most Canadians are doing the exact opposite of what helps them achieve that.
🍁 What Most Canadians Do
Here’s what most Canadians do when they retire:
Over 95% start CPP and OAS at or before age 65—because honestly, that’s just the default.
Only about 2% actually wait all the way to age 70.
And that’s even though delaying CPP gives you a guaranteed 8.4% more per year—for life.
At the same time, most people hold off on touching their RRSPs for as long as they can.
I get it—it feels like the smart thing to do. You’ve saved your whole life, and the idea of drawing it down early feels risky or even wrong.
It feels safer to leave it alone.
But here’s the problem: that combo—taking CPP early and delaying RRSP withdrawals—can actually increase your risk of running out of money later on.
And using my financial planning software, I’ll show you exactly how this small shift in strategy can change everything.
📘 Scenario 1: Start CPP at 65
Here’s what Ron’s working with:
- He has $400,000 saved in his RRSP
- He plans to spend $40,000 per year throughout retirement
- To keep this example simple, he doesn’t have a pension or TFSA—just his RRSP and whatever he receives from CPP
- In this scenario, Ron starts CPP right at age 65
- We’re assuming 2.1% inflation, which is based on Canada’s long-term average
- And his RRSP earns a 4% annual return
So how does it go?
Well—it actually looks okay on the surface.
At age 82, Ron still has a net worth of about $142,000.
Not bad, right?
But here’s the problem:
By age 87, Ron’s out of money.
His RRSP is gone, his estate is negative, and from that point on, he’s entirely dependent on CPP and OAS alone—which won’t be enough to cover his $40,000 inflation adjusted annual expenses.
And remember—this is assuming decent investment returns and no surprises.
Next, we’ll look at what happens at Wayne, who delays CPP and OAS and draws from his RRSP a bit earlier… and the difference might surprise you.
🔹 Scenario 2: Delay Both CPP and OAS to Age 70
Now let’s look Wayne’s strategy.
Just like Ron, Wayne,
- Retires at 65
- Has $400,000 in his RRSP
- Spends $40,000 per year
- Assumes 4% return and 2.1% inflation
But now here’s the crucial difference with him and Ron – Wayne is delaying both major government benefits—CPP and OAS—to maximize guaranteed income later in life.
So what happens?
Well, Wayne has to draw heavily from his RRSP in the early years to fund his lifestyle.
But once CPP and OAS kick in at 70, his withdrawals drop significantly.
By age 82, Wayne still has $144,539 in net worth.
That’s slightly higher than Ron’s $141,956 in Scenario 1, despite Wayne not receiving any government benefits for the first five years.
But here’s the big difference:
Wayne’s money lasts until age 93.
That’s a full 6 years longer than Ron, who ran out at 87.
And take a look at the government benefits:
At age 82:
- Ron is receiving $20,847 CPP and $14,565 OAS = $35,412 total
- Wayne is receiving $29,563 CPP and $18,216 OAS = $47,779 total
That’s a $12,000+ per year difference in guaranteed income, fully indexed to inflation, and for life.
So even though Wayne’s plan requires a bit more RRSP drawdown up front, the long-term reward is clear:
More income, more years covered, and more peace of mind.
If you really want to be smart like Wayne here, check out our free guide with 5 proven strategies to keep more of your money.
📩 Grab your free copy—link is here:
https://blueprintfinancial.ca/retirement-tax-saving-guide
📘 Scenario 3: Start CPP and OAS at 65 — With Lower Returns (3%)
We’re back with Ron, and this time we’re looking at the exact same scenario as before—
The only change?
Instead of a 4% return on his RRSP, we assume just 3%—a more conservative, lower-growth retirement environment.
So what happens?
At age 82, Ron now has $74,249 in net worth—
That’s nearly half of what he had in Scenario 1 with a 4% return.
And his money runs out much earlier too.
By age 85, Ron is completely out of savings and running a cash deficit.
That’s two years earlier than the 4% return scenario, where he lasted to age 87.
And again—this is with everything going right: no health surprises, no major expenses, no market crashes.
This shows how much more fragile a retirement plan becomes when returns are just a little lower—especially if you rely too heavily on RRSPs and take CPP and OAS early.
🔹 Scenario 4: Delay CPP and OAS to Age 70 — With Lower Returns (3%)
Let’s come back to Wayne— everything is the same, but this time, we’re dialing things back a bit.
Unlike Scenario 2, his investments are now earning just 3% annually, not 4%.
And yet… this strategy still works incredibly well.
At age 82, Wayne has $93,525 in net worth—
That’s almost $20,000 more than Ron had in Scenario 3 at the same age, even though Wayne started retirement without any CPP or OAS income for the first five years.
More importantly, Wayne’s money lasts all the way until age 89.
Ron, by comparison, ran out at age 85 under the same 3% return assumption.
That’s four extra years of financial security.
And don’t forget—Wayne’s government benefits are much larger:
At age 82:
- He receives $29,563 from CPP and $18,599 from OAS
- That’s $48,162 per year in guaranteed, inflation-protected income
Meanwhile, Ron was receiving about $40,144 from CPP and OAS combined at that same age.
So even in a lower-return environment, delaying CPP and OAS significantly boosts Wayne’s retirement income and extends the life of his RRSP—reducing stress and giving him more peace of mind.
🧩 The Real Problem—and Why This Strategy Works
Here’s the real problem with the “I’ll just take CPP at 65” approach:
You don’t know when you’ll die.
I get these arguments all the time. What if I delay CPP to 70, but die at 69, or 75? Wouldn’t it have been dumb to have not taken CPP and wasted all that money?
That to me isn’t the right question. The question isn’t “what if I die at 69?” Because if you die at age 69, and haven’t collected a single penny of CPP, that’s still ok, because you still accomplished your main goal of not outliving your savings.
The real million-dollar question is: “What if I live to 90?”
Because if you’re 65 and in reasonably good health, you probably won’t just live to retirement — you’ll live through it… and then some.
According to Statistics Canada, the average 65-year-old man in Canada can expect to live another 19.3 years, reaching age 84. For women, it’s even longer — about 22.1 years, reaching age 87.
And that’s just the average. Many Canadians will live well into their 90s.
So the real risk isn’t dying early.
It’s running out of money because you lived a long, healthy life.
There are three major threats to your retirement plan:
- Inflation risk – things just keep getting more expensive
- Longevity risk – you live longer than expected and outlast your money
- Investment risk – markets don’t perform the way you hoped
And here’s the thing: delaying CPP helps with all three.
It’s like buying a personal, inflation-protected, government-backed annuity.
And honestly? It’s one of the best retirement deals out there.
But that’s not the only advantage.
When you start drawing income from your RRSP earlier, you can qualify for the pension income credit after age 65—a small tax break that quietly adds up every single year.
And finally—there’s peace of mind.
When you delay CPP and lean on your RRSP earlier, you’re locking in more guaranteed income for life.
And that means you spend less time stressing about whether your money will last. Imagine a scenario, where your RRSP has a really bad performing year in your retirement, say it loses 10, 20, 30% in one year, well you’d be way less stressed out knowing you have that increased CPP money.
And in retirement? That kind of peace of mind is priceless.
👥 Who Should and Shouldn’t Use This Strategy
Now, this strategy isn’t for everyone.
It works best for people who:
- Don’t have a defined benefit pension
- Have at least a few hundred thousand saved in RRSPs
- And are in reasonably good health
On the other hand, it’s not ideal if:
- You have serious health concerns or a shortened life expectancy
- You’re in a very low-income situation and might qualify for GIS (Guaranteed Income Supplement)
- Or you already receive a large guaranteed pension
The way you time CPP and RRSP withdrawals might be one of the most underrated financial decisions you’ll make in retirement—and we’ve seen smart timing make a six-figure difference for Canadians.
If you’re looking for a retirement plan built to go the distance, our team at Blueprint Financial can help you map it out with clarity and confidence. Explore our financial planning services to get started.
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