8 Overlooked Ways To Save Tax In Retirement

8 Overlooked Ways To Save Tax In Retirement-1

This is a guest post by Mark McGrath, CFP®, CIM®, CLU®. Mark is based in Squamish, BC. Over the past decade, he’s worked with over 500 Canadian physicians and their families to achieve clarity, confidence, and comfort with their finances. Follow him on Twitter for more incredibly useful financial planning tips.

More than 1 in 5 working-age Canadians are between the ages of 55 and 64 – more than at any time in our history. With the impending retirement wave, retirement planning is on the minds of more Canadians than ever.

And while planning for a successful retirement involves many uncontrollable factors – things like inflation levels, interest rates, and your own longevity – there are some strategies you can use to increase your chance of success.

Let’s look at eight often overlooked ways to save tax in retirement and keep more money in your pocket.

Some of these may be familiar to you. But I bet there’s a couple you didn’t know about.

Make use of the pension income amount tax credit

If you have qualifying pension income, you may be able to claim the pension income amount tax credit.

A tax credit reduces your taxes owing. If you owe $500 in taxes but have a $200 tax credit, you only owe $300.

The federal amount is 15% on pension income up to $2,000, and each province has their own credit as well. On the federal portion alone, that’s a $300 reduction in your taxes.

The types of income that qualify are:

  • eligible pension income such as registered pension plan, RRIF and LIF payments (or both); and
  • annuity payments if you were 65 years of age or older on December 31, 2022, or, regardless of your age, you received payments because of the death of your spouse or common-law partner.

While this list is not exhaustive, note that income from OAS benefits, CPP benefits, and QPP benefits do not qualify.

If you don’t report eligible pension income, it might be worth taking some RRIF income before it’s required. You can convert a portion of your RRSPs – say $2,000 each year to a RRIF and get the full pension income tax credit. If you are 65 years of age or older, and your spouse does not report pension income, you can withdraw $4,000, split the income on your tax return, and each qualify for the full credit.

If you have a high income from other sources – say you’re still working, for example – this might not be to your advantage. If you withdraw RRIF income at a high tax rate that would otherwise be deferred into the future when you’re in a lower tax bracket, you may pay more tax now than if you deferred it. Even after accounting for the tax credit.

Using your younger spouse’s age for minimum withdrawals

If you have RRSPs or Locked-In RRSPs, you’ll likely convert them into RRIFs and LIFs eventually. When you do, you are required to make a minimum taxable withdrawal each year. The minimum is by default based on your age, and the percentage goes up yearly.

When you open your RRIF/LIF, you can instead opt to use your younger spouse’s age to calculate the minimum withdrawal.

For example, at age 72, the minimum withdrawal is 5.40% of the account’s value at the beginning of the year. But at age 65, the amount is only 4%.

Since you can always take more than the minimum but never less, this gives you more flexibility – it sets a lower minimum income floor.

One thing to know is that when you take the minimum amount, you are not required to have tax withheld at the source (it’s still taxable, of course). Any amount over the minimum does require withholding tax. Because of this, if you need more than the minimum based on your own age but elect to use your spouse’s age, you might receive less income each month due to the withholding tax. It all comes out in the wash when you file your taxes at the end of the year, but it can be a surprise if you’re unaware of it beforehand.

Once you elect to use either your age or your spouse’s age, you can’t change it. So, if you opt to use your age but then decide you want to use your spouse’s, you’ll have to open a new RRIF, make the appropriate age election, and then transfer your existing RRIF to the new one.

Unlock your LIF account over time

A LIF is a Life Income Fund and is like a RRIF in a few aspects. Where it differs is that there is a maximum annual withdrawal limit each year too. This maximum is the greater of either the amount set out by provincial pension legislation or the growth of the investment account in the previous year.

Each year, you must withdraw an amount between the minimum and the maximum and, like a RRIF, pay tax on it. But you might not know that you can transfer the difference between the maximum and the minimum to an RRSP (if you’re age 71 or below) or a RRIF. Doing so slowly converts a less-liquid asset – the LIF – to a more liquid asset – your RRSP or RRIF.

This gives you more flexibility in case you need to make a large one-off withdrawal, say for an unexpected expense.

Income splitting with a spouse or common law partner

Since Canada uses a graduated tax system, the more income you earn, the higher the tax on each incremental dollar of income.

By splitting income with a spouse or common law partner, you can take advantage of their lower tax brackets and reduce the family tax bill.

For example, in BC, an individual earning $100,000 of income will pay roughly $21,000 in tax. But a couple earning $50,000 each would only pay roughly $13k in tax – a difference of nearly 40%!

There are a few income-splitting techniques available to retirees in Canada:

  1. Eligible pension income splitting
  2. Using Spousal RRSPs
  3. Sharing CPP credits

Pension income splitting

Up to half of eligible pension income can be split with a spouse – the same type of income that qualifies for the pension income amount tax credit.

By moving income out of your hands and into those of a lower-income spouse, you can equalize your family income, use up their lower tax brackets, and reduce your family tax bill.

Using Spousal RRSPs

This one takes some foresight but can shift a substantial amount of income to a spouse.

A spousal RRSP gives the contributor the income deduction, but the account owner – the spouse – claims the income on withdrawal. Say you earn $100k per year, and your spouse earns nothing. If you were to use an RRSP in your own name, you would get a tax deduction on the contributions, but when it comes time to withdraw the funds in retirement, the income is taxed in your name.

Because RRIFs withdrawals are eligible pension income, you can then elect to have half of the withdrawal taxed in your spouse’s name.

Using a spousal RRSP instead, you can shift the entire withdrawal to a spouse – not just half.

Depending on your other income sources in retirement, this can lead to more income in your spouse’s hands, taking advantage of their lower tax brackets.

Another trick with spousal RRSPs is that if you have a younger spouse, you can contribute to them even when you’re no longer eligible to have your own RRSP. Usually, you must wind up your RRSPs by the end of the year you turn 71, most often by converting them to a RRIF.

But if you are still working, you’re still generating RRSP room for yourself – even if you can’t own your own RRSP. In that case, you can contribute to a spousal RRSP if your spouse is 71 or younger.

Sharing CPP

CPP income doesn’t qualify as pension income for the purpose of pension income splitting.

That doesn’t mean you can’t share it, though.

You can share half of your CPP based on the number of years you lived together. It’s calculated by dividing the number of years you lived together by the ‘’joint contributory period’’.  This period starts when the older of you turns 18 and ends when you both take CPP payments.

You must both be age 60 or older and receiving CPP payments to qualify.

For example, say Bob and Alice have been living together for 20 years. They’re the same age, and they take CPP payments starting at age 68. That means the joint contributory period is 50 years. Of that, they’ve been living together 40% of the time.

They can share half of 40% of their CPP.

Say Bob’s CPP payments are $600 and Alice’s are $1,000.

The simple way to calculate this is to take the difference in their CPP payments ($400), divide it in half, and multiply it by 40%. You increase the lower CPP amount and decrease the higher amount by this number. In their case, that’s (($400/2) X 40%) = $80 each.

In the end, Bob claims $680 in CPP income, and Alice claims $920.

The only circumstance where the amounts would be equal is if they had been living together for the entire joint contributory period.

And you can’t elect to have only one spouse share CPP – either both share, or neither do.

To share your CPP, you must apply for it through Employment and Social Development Canada. CPP sharing starts as soon as your application is approved, and you can’t apply retroactively.

Claiming medical expenses on the tax return of the lower-income spouse

Certain medical expenses qualify for a non-refundable tax credit. This tax credit can be transferred to a spouse, meaning either spouse can claim it, and qualifying medical expenses can be combined on one tax return to maximize the tax credit.

The tax credit is calculated based on the excess above the lower of two amounts – either 3% of net income or the provincial and federal thresholds for the year. For 2023, the federal threshold is $2,635.

Since either spouse can claim the expenses, it often makes sense to combine the expenses and claim them on the return of the lower-income spouse. That’s because 3% of their income is likely below the threshold set out by CRA, allowing more of the expense to be eligible for the credit.

For example, you and your spouse each incurred $1,000 of eligible medical expenses. At first glance, you would not qualify. Even combining the expenses, the total falls short of the $2,635 threshold.

But assume you are the lower-earning spouse, and your income is $40,000. Since 3% of $40,000 ($1,200) is lower than the CRA threshold, you can combine the expenses and claim the amount that exceeds $1,200 ($800 in this case). Doing so gets you a federal tax credit of 15%, or $120. Each province has a medical tax credit as well, so the savings may be even higher.

The medical tax credit can be claimed for any 12-month period that ends in the tax year. So, for 2023, you can claim expenses from June 2022 to May 2023, for example, if that’s more advantageous for you – as long as you haven’t claimed those expenses previously.

Transferring capital losses to a spouse

While this is situational, if you have capital losses from your investments that you can’t use, there’s a trick to transfer them to a spouse. Capital losses can be used to offset capital gains in the current year, the previous three years, or any year in the future.

To transfer them to a spouse, we must take advantage of the superficial loss rules that apply to non-registered accounts.

Rules prevent you or an affiliated party such as a spouse from triggering a capital loss without also divesting of the underlying asset for a meaningful period. That period is 61 days – 30 days before the loss occurs, the day of the loss, and 30 days after. If these rules didn’t exist, we could just sell an investment when there was a loss and immediately buy it back, crystallizing the loss for tax purposes but not truly disposing of the asset. CRA doesn’t like that.

The rules are designed to capture investments owned by a spouse as well. So, if you sell an investment at a loss, but then your spouse immediately buys it – the loss will be denied.

To see how it works, let’s meet Jane and Darrel.

Darrel has an unrealized capital loss this year. He got caught up in the meme-stock craze and took a bath. He has $20,000 in capital losses but no gains against which to apply them. His cost basis is $50,000, and the market value of his investment is $30,000.

Jane, however, a prudent index investor (and disappointed in Darrel’s investment decisions), has $20,000 in capital gains on her index fund portfolio.

Darrel sells his meme stocks, crystallizing his capital loss.

Jane immediately buys the same meme stocks, in the same amounts, in her own non-registered portfolio.

This does two things:

  1. Darrel’s capital loss is denied because of the superficial loss rules – his spouse bought the same shares; and
  2. The $20,000 is added to Jane’s cost basis

So while Jane bought the stocks for $30,000, her cost basis is $50,000. If she waits 30 days to sell the stocks, presuming they are still trading around $30,000 (or even lower!), she can sell them. Since her cost basis is $50,000 due to the superficial loss rules, she now has a capital loss.

Darrel’s loss is her gain.

*A Word About Single Retirees*

As many readers have pointed out, many of these strategies are only useful when there is a spouse or common law partner involved. I do want to address the concern that single seniors are being “punished” though.

Let’s reframe these ideas from the perspective of a couple.

Traditionally, there has been an income disparity between spouses. Without income-splitting strategies, spouses are unfairly affected by the existing rules, and the lower- or no-income spouse’s contribution to household finances is ignored.

For example, if one spouse stays home to raise children, their contribution to the home allows the other spouse to continue to work, earn an income, contribute to CPP, and save in their RRSPs.

Is it fair that this individual bears the entire tax burden for the family both during their working years, and through retirement? Without income-splitting, the family’s taxes are lopsided despite the low- or no-income spouses’ significant contribution to the family.

So while I don’t disagree that there are fewer tax strategies available for singles, I view the rules that single seniors must abide by as the baseline.

And these strategies are in place to prevent couples from being “punished”.

Final Thoughts

Sound planning and strategy can go a long way to ensuring a successful retirement. Using the tax saving strategies above, you give yourself that much more opportunity to enjoy the retirement you designed.

Mark McGrath is a Wealth Advisor with Wellington-Altus Private Wealth (WAPW).
The information contained herein is the opinion of the author and not of WAPW. This article is for informational purposes only and is not intended as investment, tax or legal advice. Please contact your financial advisor for advice with respect to your personal financial situation and objectives. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
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  1. Gert on February 6, 2023 at 5:57 am

    Wow! So much to consider and for me at age 60, my wife 56 we need to start looking at these things. We met with our financial advisor to review ho things will work but never covered any of these points in tax savings. Now I have questions for the advisor.
    If my wife will start drawing from here RRSP this year, I will not yet, can we split her income for tax savings?
    In her case we’re told she needs to deplete the RRSP because next year she will start receiving her pension.
    We will both elect to take Federal & Provincial pensions at either 65 or 70 whichever, I guess we’ll need to see once we reach those thresholds.
    Being invested with a big bank I assume my contribution in fees should a lot me some of this tax planning advice but so far all we’ve received is a retirement plan. It looks good and seems to provide for us well into our 90’s but didn’t cover any tax planning, medical insurance or retirement income management strategy. I still need to know how to optimize our income stream and make sure the invested income does in fact continue to provide well into our 90’s.
    I had no idea taxes had so much to do with it and now need to figure out how to make the most or these savings because although the plan looks good on paper I’m not convinced because we don’t have that much saved.

    • Frito on February 6, 2023 at 9:44 am

      Hi Gert
      Fellow reader here, poking my nose into your situation… 🙂 Two things – I was in your situation about 10 years ago. Trying to get answers as to how to efficiently and effectively draw down on savings to cover retirement living and not run out of money. We retired early so pensions and income splitting were off the table. (most pensions splitting comes into effect at 65 yrs old I believe). No one we talked to could really answer our questions. We had to become our own financial experts. Start reading. The more you investigate and learn, the clearer your personal situation will become. Boomer and Echo has an extensive archive of retirement articles that are a good start. Look for book recommendations too. The financial advisor at a desk in a bank is not your best resource in my opinion. Which brings me to the 2nd thought – I did a bit of a spit-take reading

      “In her case we’re told she needs to deplete the RRSP because next year she will start receiving her pension”

      This makes zero sense to me! Deplete an RRSP at 56???

      Thanks for listening – poking nose being retracted….

      • Gert on February 6, 2023 at 10:57 am

        Thanks Frito! Are there any books you can recommend? The reason depleting the RRSP is due to the amount of her pension plan. Adding RRSP to that will put her in higher tax bracket and thus paying more tax. I don’t understand how all the tax implications work but I plan on asking my advisor to arrange for a tax specialist meeting. As I understand it I pay fees and tax planning should be part of those costs.
        In any event we’re entering into the unknown and it’s a little overwhelming.

        • Mark McGrath on February 6, 2023 at 11:22 am

          Gert that’s certainly possible that the RRIF income will put her into a higher tax bracket.

          But keep in mind the investment returns in a RRIF are also tax-deferred.

          That said, I often recommend that clients draw down their RRIF to some degree before pension income or CPP/OAS kicks in, but it’s very situational.

          Good luck with your meeting with the tax specialist, and I hope it brings you clarity!

        • Frito on February 6, 2023 at 11:43 am

          I hear you on the overwhelm! I knew we were in a good position to retire early but the actual process was a huge mystery, no matter how many advisors or current retirees we quizzed. The best defense from regrets is to arm yourself with information. Even experts haven’t seen every scenario so one solution definitely doesn’t fit all. The better questions you ask the better answers you get and that comes from understanding finances better.

          The one book I bought and actually read through was “Your Retirement Income Blueprint” by Canadian Daryl Diamond (2nd edition). It completely sharpened my focus on how to look at retirement income streams from both a tax and and longevity lens. It was the start of understanding the big picture. Again, check the archives in this site’s menu. Robb has done an excellent job in chronicalling his articles over the years including links to other bloggers.

          It’s a bit of work but the anxiety level drops with more knowledge.

          • Gert on February 6, 2023 at 1:13 pm

            Frito, Mark,
            Thanks so very much for your insight and comments, much appreciated!
            Frito, I bought “Your Retirement Income Blueprint” (a Canadian Bestseller to boot and at $26.95 a worthwhile investment) Thanks very much! I’m looking forward to this read. I’m sure it’ll leave me scratching my head less.

          • Bob S on February 6, 2023 at 2:51 pm

            Based upon it’s “bestseller” status, I had also bought Retirement Income Blueprint a few years ago.

            It does contain a wealth of good information but one quibble I have with that book is that the author seems very wedded to certain strategies and does not adequately describe other options. From what I recall, he advises taking CPP at 65 and using a Bond Ladder, both of which are sub-optimal choices for many.

            Another book I recommend is Retirement Income for Life by Fred Vettesse.

      • Mark McGrath on February 6, 2023 at 11:20 am

        You came to the right place for self-education, that’s for sure!

        You’re correct that most income splitting is only available after 65, though with defined benefit pensions splitting is available earlier.

        I agree with you that no one “needs” to deplete their RRSP prior to taking a pension, so more context is needed here to understand the recommendation from the bank advisor.

    • Mark McGrath on February 6, 2023 at 11:18 am

      Hi Gert –

      For most types of pension income, including RRIFs, you can’t split the income until age 65. The exception to this is a defined benefit pension plan, or if the pension is being paid to you as the result of death of the original pension holder.

      You certainly don’t “need” to deplete the RRSPs before pensions kick in, but depending on your circumstances there can be an advantage to do so. This is more common with early retirees who have not taken their pension yet, or who are deferring CPP and OAS into the future. By withdrawing from the RRSP/RRIFs, you get income to live on now while you wait for your other pension income to start, and you can potentially smooth out your taxes over your retirement.

      But there’s no rule that you have to deplete the RRSP, so whether it’s beneficial for you will depend on your specific circumstances.

      I do agree that the fees you pay for an advisor should be of value to you, and ideally should encompass more thorough financial planning. And keep in mind that a set of projections is not a financial plan!

    • David S on February 7, 2023 at 8:19 am

      Hi Gert. A book I can highly recommend is Master Your Retirement by Douglas V Nelson. I am just starting to reread it since beginning my own early retirement. It’s full of excellent info including what Mark has highlighted in this valuable post. It doesn’t sound like you’re getting ideal advice for your situation.

      • Gert on February 7, 2023 at 7:16 pm

        Hi David, Bob
        I’ll take a look at Master Your Retirement and Retirement Income for Life, thanks!
        I imagine there are so many books out there that offer a wealth of info. One thing that does make sense is every situation being different.
        I met again with my advisor and we did discuss a multitude of things including tax splitting down the road. I gained some clearer understanding as to why we haven’t gone into too much further detail; basically something I had said way bake was that I wouldn’t be ready to touch my savings for at least another 5 years. My wife on the other hand will use some of her RRSP savings to cover the next year before her pension kicks in. Once that happens her RRSP will continue to work for her. We are now invested with a lot of dividend funds which are automatically reinvested. Once we get to the point of needing more, or less, money a more detailed plan will be provided ensuring there will always be money. We will also be meeting with a tax advisor provided through our investment advisor. So in the end, thanks in large to all of you, I feel a hole lot wealthier. I can’t wait to get through all my reading.

        I want to say a special thanks as well to Mark and of course Robb for all the wealth of information. I don’t always understand everything but always know that there are good people ready and willing to fill in the unknown with sound advice.
        Thank you all!
        Looking forward to the next Boomer&Echo topic of discussion.

        • Mark McGrath on February 7, 2023 at 10:32 pm

          Hi Gert – it’s great that you found some clarity by talking to your advisor, and that you’re feeling wealthier for it 🙂

  2. Jerree on February 6, 2023 at 6:07 am

    Wow, there is so much that couples can do to save money! What can singles do??? Overall, the cost of living as a single person is higher than living with a spouse. Married couples share many basic expenses, including housing, while a single individual must cover those costs alone….so why are all the tax breaks for couples? Please do an article on what singles can do to save on taxes.

    • mtnmomma on February 6, 2023 at 8:50 am

      Yes, thanks for that perspective Jerree. Many, many people are single and expenses are high. What can singles do now (53yo) and in the future to set ourselves up for success?

      I’d suggest that the systems are set up for couples, because the systems were created (out dated) in a time when being in a couple was the norm or expectation, which is no longer true, and another measure of marginalization.

    • Mark McGrath on February 6, 2023 at 12:14 pm

      Thanks for your comment Jerree. We’ve added an addendum with my thoughts on this topic in the article. Hopefully you find it helpful.

      While you’re right that couples share expenses, a single person generally does live on less than a couple.

      Certain fixed costs like housing might not change, but it depends on the circumstances. Travel, transportation, entertainment etc. are usually reduced in a single household vs. a two-person household.

  3. Mark on February 6, 2023 at 6:31 am

    You can see how stacked the deck is against a single senior. All but two of the tips here apply to couples and one concerning LIFs is a fairly specialized case. When my wife passed away, my back of the envelop calculation showed annual income losses of >$40K (loss of both OAS = $15K, loss of her CPP = $8K, increases taxes ~$25K, possibly more). I won’t receive any survivors CPP in retirement as I qualify for the maximum on my own.

    One further tax saving tip – that can help in a single year. This can be especially helpful in my situation where I will face significant OAS clack. If you defer OAS you can ask for retroactive payments for up to a year. So for example if you notify the government that you want to start OAS payments in the January you turn 70 you could ask for the payments for the previous year as well. This will effectively double your OAS payment for that year and avoid additional OAS clawback. Of course that only works for one year, but if it puts a few extra thousand in your pocket it’s worth considering.

    • Jerree on February 6, 2023 at 8:58 am

      Thanks for the tip regarding OAS! These are the things I need to find out about as a single. It is extremely easy to find articles etc for couples, but nothing is ever written for singles. As you demonstrated, there are hidden gems for singles but these are never published.

    • Mark McGrath on February 6, 2023 at 12:15 pm

      Thanks Mark.

      Great tip regarding OAS. I first learned about this myself through an excellent post by Aaron Hector on the topic. I believe he called the “OAS Super Ceiling”.

  4. Jennifer on February 6, 2023 at 6:47 am

    Really appreciate this article! My husband and I are 11 years apart in age, and while retirement is still a few years off, I’m already trying to figure out long-term withdrawal strategies.

    • Mark McGrath on February 6, 2023 at 12:15 pm

      Glad you found it helpful Jennifer!

  5. Brenda on February 6, 2023 at 7:07 am

    I agree with Jeree, the single senior appears to have fewer options but the same expenses as a couple. I’d also appreciate more articles for single seniors, both pre-retirement and retirement.
    Great articles, thank you!

    • Mark McGrath on February 6, 2023 at 12:18 pm

      While there are fewer tax-savings mechanisms for singles, usually a couple’s expenses are higher than a single’s.

      That said, you’re right that income-splitting is a significant benefit, and obviously not generally available to single seniors.

      We added a short paragraph to the article that might help reframe the thinking around the tax breaks couples get.

      And as another commenter mentioned, an article on tax-savings strategies for singles would, unfortunately, be short!

  6. Tom on February 6, 2023 at 7:19 am

    The above article states an obvious problem with our senior population:

    “You can see how stacked the deck is against a single senior”. Also, “Please do an article on what singles can do to save on taxes.” Stacked for sure and no you will not find tax saving articles for singles as there is not enough material to do so. Not only is there so little options for singles there penalty taxes for singles eg capital gains taxes and increase cost of living for single seniors.

    Unfortunately there are many senior citizens and at some point we all will be single.

    • Robb Engen on February 6, 2023 at 12:15 pm

      Hi Tom, thanks for this – you’ve hit the nail on the head.

      Mark’s addendum does address this perceived unfairness, though. It’s helpful to reframe the single’s situation as a baseline, not as a punishment.

    • Mark McGrath on February 6, 2023 at 12:18 pm

      Unfortunately you’re right that on article on the topic would be relatively short, since income-splitting is one of the primary tax savings strategies that couples can avail themselves of.

  7. Brad S on February 6, 2023 at 8:05 am

    +1 for singles info

  8. Paul on February 6, 2023 at 8:07 am

    nothing for a single guy I guess I need a partner!

    • mtnmomma on February 6, 2023 at 8:55 am

      Ha – I was thinking the same thing. Get married aftr 65 for the tax benefits and cost of living saving. Like an arranged marriage / green card marriage.

      • Mark McGrath on February 6, 2023 at 12:20 pm


        I’d take being single and not getting the tax benefits over a marriage of convenience personally, but to each their own 😉

        My guess is the probability of divorce would go up, and divorce can be expensive enough to offset the tax benefits anyways!

  9. Jason on February 6, 2023 at 8:18 am

    There was no mention of a spousal loan in the income splitting section. Can you provide your thoughts on this strategy?

    • Mark McGrath on February 6, 2023 at 11:47 am

      Hey Jason –

      I chose to leave that strategy out for 2 reasons.

      1. It generally only makes sense when there is a large non-registered portfolio owned by one spouse, with little income for the second spouse. While these situations definitely exist, they are generally reserved for high-net-worth families and I wanted to focus on strategies available to a wider audience.

      2. With the prescribed rate going to 5% in Q2 of this year, the strategy has largely lost its advantage. If interest rates come down again it will be useful, or if you locked into a spousal loan at a lower rate then you continue to benefit.

      That said, when the math works – it’s a great strategy to split investment income.

  10. Judy on February 6, 2023 at 10:16 am

    Your credibility took a hit with the very first sentence: “More than 1 in 5 Canadians are between the ages of 55 and 64…”
    I direct you to Statistics Canada at https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000501 which shows that in the age group 55-64 there are (estimated) 5.3 million people out of a national population of 38.9 million, or less than 14%, or less than 1 in 7.
    It is not the decade with the largest population, according to StatsCan (that belongs to the 30-39’s).
    But for just one decade, that it still a significant number, and the rest of the article is loaded with useful (and completely credible) information.
    You didn’t need to exaggerate to make the point.

  11. Frito on February 6, 2023 at 10:39 am

    Interesting info on the LIF transfer option. Can you give a bit more on that? A scenario maybe? Is it a straight across transfer or do you have to have contribution room? Or a point in the direction of more research. I have an annoyingly small locked in RSP through a past employer and would love to be able to clear it out as quickly as possible.

    I have also never heard about CPP sharing – well kept secret for sure!

  12. Ken T on February 6, 2023 at 11:31 am

    I will give a plug here for Robb’s service which I have never used but think the advice and service he provides is very good. I am well versed in the finances/tax/financial planning and meet with friends/family on regular basis to discuss these type of questions and scenarios. I also coach (as a “hobby”)young people and young couples that are planning on getting married on personal finance to help them gain some financial literacy as they move through their lives.

    I read the Boomer and Echo site all the time and refer people often as it is one of the best sites I have seen in Canada.

    The simple suggestion for all the people leaving comments is to hire Robb (or another fee only advisor) to develop a plan that takes into account your specific situation. And also read all the articles on the site to get up to speed on the various issues. These issues are very complex and many people do not have the inclination or the knowledge to do it without some help.

    I have no vested interest in providing this referral but part of the reason the website exists is to give people access to someone with the services they need.

    • Mark McGrath on February 6, 2023 at 12:01 pm

      Agreed Ken, Robb has done an invaluable service to people through his blog and the work he does as a financial planner.

    • Robb Engen on February 6, 2023 at 12:11 pm

      Ken, thanks so much for the kind words – it means a lot!

      I agree that many articles are shared as tips and strategies for the general “you”, but everyone’s situation has some unique aspect or nuance that requires a more in-depth look to see what would work best or if the tips even make sense for your age and stage of life.

  13. Robb Engen on February 6, 2023 at 12:08 pm

    We’ve heard the message from our single readers loud and clear and Mark has kindly added “A Word About Single Retirees” to the end of this post to address some of these concerns.

    • Elaine Calder on March 14, 2023 at 5:36 pm

      After one member of a married household dies, there’s less income and yet income taxes are higher – especially if the surviving spouse is the one with the large pension they were previously splitting. Meanwhile, mortgage or rent, condo fees, property taxes, insurance, utilities (minus one cell phone) remain the same. Yes, it’s cheaper to travel but only ticketed transportation costs go down, not hotel rooms, gas, etc. There are probably other expenses that remain unchanged, that don’t come to mind right now. I fail to see how this is “fair”.

  14. Michael James on February 6, 2023 at 12:31 pm

    It was my understanding that for those under age 65, RRIF and LIF income is only eligible for the $2000 pension income amount tax credit when a spouse or partner dies. I’m not sure if Mark is saying something different here.

    • Mark McGrath on February 6, 2023 at 1:11 pm

      Hi Michael,

      That’s correct. When I say ‘eligible pension income’ or ‘qualifying pension income, I’m using CRA’s language to indicate that it only qualifies in certain circumstances.

      I did mention in the section underneath that the RRIF withdrawal strategy is available if you are 65 or older, though I probably could have been more clear on that point.

  15. Phyllis on February 6, 2023 at 12:56 pm

    Gert, I highly recommend going with a fee only advisor like Robb. The banks business is to make money for themselves. One year our accountant told us we needed to contribute a lot of money to an RRSP. Knowing nothing we went to our local BMO and bought mutual funds that charged fees of 2.5%+. After coming across the boomerandecho website we realized we needed to do something about the high fees we were paying. Coincidentally, about that time, our bank manager suggested we visit their financial planner to make sure we were still invested suitably so I made an appt with her. Thanks to Robb and his mom I had done some research. The FP suggested staying with what we had. I played dumb and said, “Don’t they have stuff with lower fees these days?” There was a smartfolio poster on the wall of her office so I asked what it was about (I had looked into it and already knew it was BMOs roboadvisor and only charged about 1% fees). She had no idea what it was. I suggested she google “BMO smartfolio” to find it, which she did. She had no idea they had a product that charged only 1% fees. I asked how much I would save until age 65 by paying 1 1/2% less in fees. She said, “I wouldn’t be able to figure that out.” With a little help from Robb’s mom we opened BMO Investorline self-directed accounts where we pay about 0.25% in fees. I believe that financial planner is a good person and would want to do the best for me but the banks train their workers to sell the products that make the most money for the bank not the customer. You will very likely not be given good advice by the bank’s adviser.

    • Mark McGrath on February 6, 2023 at 1:28 pm

      Nice of them to offer financial planning after you were already paying fees that entitled you to that service 😉

      Good on you for taking your financial education into your own hands Phyllis!

    • Gert on February 7, 2023 at 7:42 pm

      Hi Phyllis,
      Thanks for your comments and advice. I have often contemplated contacting Robb as a fee only advisor but am worried I won’t understand everything. I’ve tried a few times getting my wife on board as well but she’s also worried about understanding. This is one of the main reasons why we stay in the Nesbitt Burns program. My new advisor is really good (recently changed) and has addressed my fee concerns by reducing all fees down to about 1.7%.
      From what I understand about mutual funds vs. ETF is that there are different qualities of these funds and of course differences in the returns they provide. Having a managed mutual fund with quality companies would in turn provide higher returns. So should it be fees or returns when deciding on buying a Mutual or ETF?

      • Mark McGrath on February 7, 2023 at 10:36 pm

        Something to keep in mind Gert is that if you found Robb’s blog a helpful educational source for finding clarity around financial topics, I’m sure that would carry over to his work as a planner.

        Perhaps Robb can comment further on your question about fees and the claims about actively managed funds providing higher returns. I fear if I get going on the topic, I might have to write a whole separate post 🙂

        And I’m quite confident that Robb and I share the same opinion on the topic.

      • Phyllis on February 9, 2023 at 6:33 pm

        There is very much I don’t understand about investing and that is a good reason to pay someone who does understand. We pay a lot to have our taxes done every year but paying someone who knows what they are doing has saved us many tens of thousands of dollars; we don’t have the knowledge that she has. When we meet with our accountant every year for pre tax planning our goal is to learn just a little bit more. Seeing a fee only adviser would be a great place to start learning and what you save will probably more than pay for the fees.

  16. Jerree on February 6, 2023 at 1:28 pm

    I might consider income splitting ‘fair’ as you state for families if one spouse never worked, but this is not true for the majority of couples. When both spouses work, they both get to contribute to RRSP, TFSA, Spousal RRSPs, & FHSA. The couple doubles their tax advantaged investments vs a single. Then they get all the tax benefits you outlined above after they retire. The majority of couples purchase houses that are capital gains free on their death creating significant wealth whereas a single renter who invests the same amount is taxed heavily at death. If I, a single, have an annual income in retirement of $100,000 I pay every dime of taxes and loose benefits such as OAS, but a $100,000 individual in a couple gets to income split thereby saving tax and potentially being able to increase benefits and this doesn’t even account for the fact that the spouse may also have income. I appreciate that you took the time to add an addendum about singles, but I think your comment fell short.

    • Mark McGrath on February 6, 2023 at 1:32 pm

      Those are fair comments Jerree, and I don’t disagree with what you’re saying.

      You’re right that family dynamics have changed over the past decades, often with both spouses contributing to the family’s finances.

      But in those cases, the income-splitting is far less effective as well, since the couple’s taxes are closer to being equal.

      There’s no doubt, a two-income household is going to have more opportunities both during their working years and in retirement.

    • Elaine Calder on March 14, 2023 at 5:38 pm

      Thank you! You said it better than I did, although I think my comment supports yours.

  17. Ron on February 6, 2023 at 8:57 pm

    Hi Mark, I’ve looked at your break down on Twitter which I understand, I just can’t find any reference to this strategy anywhere. I live in Ontario and the transfer would not be due to non residency, or financial hardship or small balances , or reduced life expectancy etc. Can you offer a specific link to this strategy in the tax tips links you have provided. I couldn’t find it anywhere although I didn’t look in detail at other provinces. I guess that’s why it’s a little known strategy

  18. Monica on February 7, 2023 at 3:33 pm

    Hiring Robb as my fee for service advisor is the best thing I could have done!

    • Robb Engen on February 10, 2023 at 7:23 am

      Monica, thanks for the incredibly kind words!


  19. Phyllis on February 9, 2023 at 6:50 pm

    Robb, we have our RRSPs and TFSAs in ETFs. Do you hire out just for portfolio advice? We are getting closer to retirement and I think we need to change it up a bit but are not sure exactly what we should do. Is that a service you offer?

  20. Garth on February 11, 2023 at 10:39 am

    Thanks to Mark and Robb for the fine article. Not sure if this has already been mentioned in the comments… Most every young Canadian should be encouraged to contribute to the Saskatchewan Pension Plan. All Canadian residents are eligible. Try to contribute enough to take advantage of the $2000 Pension Tax Credit by starting withdrawals as early as age 55. Wish I had done it myself…too late smart.

    • Mark McGrath on February 11, 2023 at 8:53 pm

      I actually didn’t know about this, thanks for sharing Garth! I’m a big fan of pensions in general, and while I don’t know much about the SPP, I think buying into a guaranteed retirement income stream during your working years is a prudent idea for many.

  21. Jay Patel on March 14, 2023 at 6:48 pm

    Quote: The types of income that qualify are: (Can be claimed as pension income amount)

    eligible pension income such as registered pension plan, RRIF and LIF payments (or both); and
    annuity payments if you were 65 years of age or older on December 31, 2022, or, regardless of your age, you received payments because of the death of your spouse or common-law partner.”

    My question is can you claim withdrawals from LIF as pension income amount, if you are between 55 and 65 years old (i.e below 65 years) ?.
    If not, what else can be claimed as pension income amount besides the pension from “defined benefit pension plan” Thanks

    • Mark McGrath on March 16, 2023 at 10:22 pm

      Unfortunately not Jay, LIF income only qualifies after age 65.

      Qualified pension income for the pension tax credit (from taxtips.ca):

      – life annuity payments from a superannuation or pension plan

      – payments from a RRIF, or annuity payments from an RRSP or from a DPSP, which have been received as a result of the death of a spouse or common-law partner

      – since tax year 2010, annuity payments from the Saskatchewan Pension Plan (SPP)

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