Most Canadians focus on growing their retirement savings, but often overlook how taxes might impact those savings later. It’s a common oversight.

Think of it like planting a garden without checking for squirrels. You may grow something great—only to watch it disappear. Taxes can work the same way on your retirement income if you don’t prepare.

Here’s a tax-conscious approach to structuring your retirement income sources.

💸 Why Taxes Matter in Retirement

• RRSPs: Provide tax-deferred growth and a deduction today—but withdrawals are fully taxed later.
• TFSAs: Grow and withdraw tax-free—but do not reduce your current taxable income.
• CPP & OAS: These may increase your overall income in retirement—affecting your marginal tax rate. OAS benefits can also be reduced if your income surpasses certain thresholds.

3 Common Retirement Tax Pitfalls (and Tips to Consider)

1. RRSP Withdrawals and Tax Brackets
RRSPs offer tax savings when you contribute, but every withdrawal is fully taxable.

📝 Consider:

• If you anticipate a higher income in retirement, focusing on your TFSA may provide more flexibility.
• Gradual RRSP withdrawals may help avoid higher tax brackets.

2. OAS Clawback Thresholds
In 2024, Old Age Security starts to be reduced once income exceeds $90,997.

📝 Consider:

• TFSA withdrawals do not count toward your income and may help reduce clawbacks.
• Coordinating when to draw from RRSPs or RRIFs may help manage your taxable income.

3. Taxation in Non-Registered Accounts
Interest, dividends, and capital gains are all treated differently.

📝 Consider:

• Placing interest-earning investments in tax-sheltered accounts like RRSPs or TFSAs.
• Using tax-efficient investments (e.g. equity-based funds or ETFs) in non-registered accounts may help manage overall tax impact.

Building a Tax-Conscious Income Strategy

Step 1: Estimate your retirement income
→ Will you be in a higher or lower bracket than now?

Step 2: Balance RRSPs and TFSAs
→ RRSPs may suit high-income earners.
→ TFSAs offer tax-free withdrawals and income flexibility.

Step 3: Coordinate Withdrawals
→ TFSAs can help manage income early in retirement.
→ RRSP/RRIF withdrawals can be delayed until age 71 (or later for strategic planning).

🗓️ Want to explore how this could apply to your financial strategy?
Book a no-obligation conversation here:
👉 https://calendly.com/arlenefinancial/meet-and-greet

Disclaimers:
World Financial Group (WFG) is a financial services marketing company whose affiliates offer a broad array of financial products and services. World Financial Group Insurance Agency of Canada Inc. (WFGIA) offers life insurance and segregated funds. WFG Securities Inc. offers mutual funds.
WFG, WFGIA and WFGS are affiliated companies. Headquarters: 5000 Yonge Street, Suite 800, Toronto, ON M2N 7E9. Phone: 416.225.2121

This material is intended for educational purposes only. It should not be considered tax or legal advice. Please consult your own qualified tax or legal professional for guidance tailored to your individual situation.