You’ve made it to retirement. You saved, invested, and built your nest egg. The hard part’s over, right? Almost. One overlooked decision—when and where to pull your money from—can cost you a fortune in taxes.
At Blueprint Financial, we’ve helped many Canadians build financial plans to master this exact decision to keep more of their money, sometimes tens or even hundreds of thousands of dollars. In this blog post, I’ll show you the smart withdrawal order most Canadians should follow, but also the exceptions.
Your Pre-Retirement Withdrawal Checklist
Before we dive into the order, we need to take a quick snapshot of your financial landscape. Think of this as your personal retirement dashboard.
- Goals: First, what’s the mission? Are you planning to spend every last dollar enjoying your retirement, or do you dream of leaving a legacy for family? This defines your entire strategy.
- Assets: Next, what are you working with? Add up everything in your RRSP, TFSA, non-registered accounts, and any corporate savings. The mix of these accounts determines your flexibility.
- Income Sources: List all your guaranteed income streams—CPP, OAS, company pensions, annuities, or rental income. This is your financial bedrock, the income you have before you even touch your savings.
- Understanding Your Tax Bracket: This is the big one. Your tax bracket decides how much of each dollar you actually get to keep.
Here’s what the 2025 combined Federal and Ontario tax brackets look like. These rates are for Ontario, but every province has slightly different thresholds and rates.
Most middle-income retirees aim to stay in that 20-30% combined range. It’ll become clear why your tax bracket matters so much once we walk through examples of how different withdrawal orders affect your lifetime taxes later on.
| Taxable Income (2025) | Combined Marginal Rate on Ordinary Income | Capital Gains | Eligible Dividends | Non-Eligible Dividends |
| Up to $52,886 | 19.55% | 9.78% | –7.55% | 8.66% |
| $52,886 – $57,375 | 23.65% | 11.83% | –1.89% | 13.38% |
| $57,375 – $93,132 | 29.65% | 14.83% | 6.39% | 20.28% |
| $93,132 – $105,775 | 31.48% | 15.74% | 8.92% | 22.38% |
| $105,775 – $109,727 | 33.89% | 16.95% | 12.24% | 25.16% |
| $109,727 – $114,750 | 37.91% | 18.95% | 17.79% | 29.78% |
| $114,750 – $150,000 | 43.41% | 21.70% | 25.38% | 36.10% |
| $150,000 – $177,882 | 44.97% | 22.48% | 27.53% | 37.90% |
| $177,882 – $220,000 | 48.28% | 24.14% | 32.10% | 41.71% |
| $220,000 – $253,414 | 49.84% | 24.92% | 34.25% | 43.50% |
| Over $253,414 | 53.53% | 26.76% | 39.34% | 47.74% |
Once you’ve got this snapshot, the right withdrawal order becomes much clearer, so let’s get into it!
1) Taxable (Non-Registered) Accounts
Why Start Here
These investments are the most exposed to annual taxation. Even when you’re not selling, income from interest or dividends can still trigger a tax bill. This “tax drag” slows long-term growth.
By drawing from this account first, you’re spending the money that’s constantly losing a piece of its return to taxes.
Managing Capital Gains
Capital gains exposure: Check your non-registered investments for large unrealized gains. Find out what the ACB is, and compare to it’s value today. That will be your cap gains exposure. Managing when and how you realize those gains is a big part of keeping your taxes efficient.
Try to realize gains in low-income years or before 65 to avoid OAS clawback issues. Even though only half a gain is taxable, it still raises your net income. Watch dividend gross-ups too, as they can inflate taxable income even when dividends seem tax-favoured.
Jerry and Evelyn’s Smart Timing
At 63, Jerry and Ev have $300,000 in a non-registered portfolio. Instead of tapping their RRSPs, they realize $15,000 in capital gains this year while in a low bracket. Once they turn 65 and start OAS, they’ll pause large sales to avoid clawback. This simple timing move saves them thousands without extra risk.
When This Might Not Fit
It might make sense to hold off if your non-registered account serves as a cash reserve or you’re managing large unrealized gains to smooth income between brackets.
2) Tax-Deferred Accounts
(RRSP, RRIF, LIRA, FHSA, etc.)
Why Draw From These Next
Once you’ve used your taxable money strategically, the next step is usually your tax-deferred accounts — RRSPs, RRIFs, LIRAs, or an FHSA no longer used for a home.
Every dollar withdrawn is fully taxable, but you have flexibility in when and how much to take. That timing can make a big difference over your lifetime. The key is balancing lower taxes now with smaller forced withdrawals later.
The advantage here is control — you decide how much income to create each year, instead of letting the CRA decide at 71.
How to Do It
Use a bracket-filling strategy: withdraw enough to reach the top of your current tax bracket without spilling into the next. Think of it as filling a glass right to the rim without overflowing.
For most retirees, that sweet spot is in the 20–30% combined tax range.
Consider partially converting your RRSP to a RRIF around age 65, even if you don’t need the income yet. This allows pension splitting and the pension income credit, helping lower household taxes.
Coordinate RRSP or RRIF withdrawals with other income sources. If you expect a large capital gain or business sale, pause withdrawals and rely on your TFSA instead to stay in a lower bracket.
Check your province’s LIRA unlocking rules, as many allow partial access after 50 or 55. And remember, FHSA withdrawals after the qualifying period are taxable like RRSP income.
Sophie’s Smart Planning
Sophie, age 62, has $400,000 in her RRSP, $50,000 in non-registered savings, and a small TFSA. She starts withdrawing $25,000 a year now, keeping her in roughly the 20% tax bracket.
One year, she triggers a large capital gain from her non-registered portfolio, so she pauses RRSP withdrawals and lives from her TFSA instead.
By managing her income this way, Susan avoids tax spikes, reduces future RRIF minimums, and keeps her cash flow steady.
When This Might Not Fit
If you’re near GIS eligibility, early RRSP withdrawals can reduce benefits. It can also backfire in high-income years, like when selling a property or business, since added RRSP income can trigger higher taxes or OAS clawback.
Estate Planning Angle
RRSPs and RRIFs are fully taxable at death unless transferred to a spouse, which can leave a large tax bill for heirs. If legacy planning matters, consider gradual withdrawals within a steady tax bracket and using some after-tax funds for a permanent life insurance policy, turning taxable dollars into tax-free proceeds for your beneficiaries.
This is the kind of planning we take hours to fine-tune with clients using professional financial software. For a personalized withdrawal strategy that aligns with your income, taxes, and goals, our CFP® and retirement professionals at Blueprint Financial can help.
👉 Book your free discovery call at blueprintfinancial.ca — build the retirement you want, with the right Blueprint.
3) Pensions: CPP, OAS, and GIS
Why These Matter
I debated even including CPP and OAS in this video since they aren’t accounts you can technically “withdraw” from — but when you start them is one of the most important retirement choices you’ll make so I decided to include it.
The timing affects not just your guaranteed income for life, but also how you should draw from your RRSPs and TFSAs. Coordinating these together can dramatically change your after-tax income. Many Canadians overlook this, but if you’re watching, you’re already ahead.
Consider Delaying
For most retirees, delaying CPP and OAS as possible makes the most sense. CPP grows by 0.7% per month after 65 (up to 42% more at 70), and OAS by 0.6% per month (up to 36% more). It’s a simple, low-risk way to raise your guaranteed, inflation-protected income.
I’ve seen this decision transform retirements on a mental level as well. Many clients have told us delaying CPP was the best move they ever made — not just for the money, but for the peace of mind.
Example: Cathy and John’s Smart Delay
Cathy and John, both 63, delay CPP and OAS until 70 while drawing modestly from their RRSPs. The result? About 40% higher lifetime guaranteed income and far more peace of mind during market swings.
When Not to Delay
If your health is poor or savings are tight, starting earlier can make sense. Also consider survivor benefits — if one spouse has a higher CPP record or there’s a large age gap, starting earlier can help protect the surviving partner.
OAS and GIS Integration
Watch the OAS clawback, which starts around $93,000 of income in 2025. If you’re near that threshold, use TFSA withdrawals or defer capital gains. Couples can use RRIF splitting to smooth income and reduce clawbacks.
If you’re targeting GIS, do the opposite: delay taxable income, spend from your TFSA first, and start CPP and OAS later for larger lifelong benefits.
4) Tax-Free Accounts (TFSA)
Why It’s Often Last
Your TFSA is one of the most powerful tools in retirement. Withdrawals are completely tax free and don’t affect income-tested benefits like OAS or GIS, which is why most retirees save it for last.
It also works as a volatility buffer — in market downturns, draw from your TFSA instead of selling investments in taxable or RRIF accounts at a loss. That flexibility helps protect your portfolio and smooth your income.
How to Use It
Let your TFSA grow while using other accounts for income. In high-income or down-market years, use it to fill the gap and keep taxes steady. It’s also the best place for high-growth investments since gains are never taxed.
If your RRSP is large, consider withdrawing gradually and re-contributing the after-tax amount to your TFSA — converting taxable dollars into future tax-free income.
Mini Example: Helen’s Long Game
Helen, 65, has savings across her RRIF, non-registered account, and a $140,000 TFSA. Instead of using her TFSA early, she draws from her RRIF first. Over a decade, her TFSA compounds tax-free to $220,000. Later, she uses it for a car and healthcare costs — without affecting her OAS or tax bracket.
When It Moves Up the Order
Sometimes it makes sense to use your TFSA earlier:
- If you’re planning around GIS, draw from your TFSA first to keep taxable income low.
- If you’re near the OAS clawback threshold, TFSA withdrawals help stay under the limit.
- In a year with large gains or property sales, use your TFSA for spending to manage brackets.
- After receiving an inheritance or business proceeds, contribute over time to shelter future growth and reduce long-term taxes.
If you want to save more on taxes in retirement, 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
5) Other Income Sources
Home Equity (HELOC or Reverse Mortgage)
Home equity should be treated as a last-resort safety net, not a regular income source. A HELOC can act as a liquidity buffer during market downturns, giving you short-term cash without selling investments at a loss. Set it up early while you still qualify and repay it once markets recover.
A reverse mortgage is more permanent — useful later in life to fund care or stay in your home longer. It can free up cash flow but comes with higher interest and fees, so use it selectively. Think of your home as your financial safety valve when other options aren’t ideal.
Business Income or Corporate Investments
If you own a business or hold corporate assets, withdrawals can get complicated. Between eligible and non-eligible dividends, capital gains exemptions, and IPPs, timing matters. Aim to take dividends or distributions in lower-income years and lean on your TFSA in higher-income years to manage taxes.
This topic deserves its own deep dive, but if you need guidance, Blueprint Financial can help you coordinate a smart withdrawal strategy.
Rental Income
For rental properties, focus on net income after expenses. Coordinate rental income with RRSP withdrawals or capital gains to avoid tax spikes. In low-rent or high-expense years, use your TFSA for spending to smooth cash flow.
Defined Benefit Pensions and Annuities
Pensions and annuities provide stable taxable income — your foundation in retirement. Plan other withdrawals, especially from RRSPs or RRIFs, around this base to stay within your ideal tax bracket and keep cash flow consistent.
Getting your withdrawal order right could mean thousands more in your pocket — and years of extra financial freedom.
At Blueprint Financial, we help Canadians design personalized withdrawal strategies that align with their income, benefits, and long-term goals. Explore our financial planning services to start your plan today, and join our free financial newsletter for ongoing insights to help you make the most of your money in retirement.
