Out Of The Box RRSP Ideas For Retirement
A lot of RRSP advice follows a similar script. Contribute while you’re working, convert to a RRIF at 71, withdraw the minimum, and hope for the best.
But retirement planning is where the interesting stuff actually happens. With a bit of flexibility and good timing, RRSPs can be used in ways that smooth taxes, improve cash flow, and reduce future headaches.
Here are a few out-of-the-box RRSP and RRIF ideas I’ve come across lately. All perfectly allowable, rarely discussed, and focused on making better decisions over a full retirement.
Contribute to a Spousal RRSP after 71
One involves an older spouse who turned 71 in 2025. While they were forced to close their own RRSP, they still had unused contribution room. Even though their personal RRSP was gone, that contribution room did not disappear.
They continued contributing to a spousal RRSP for their younger spouse, using that valuable contribution room and extending tax deferral beyond what most people assume is possible.
Use Early RRSP Withdrawals to Smooth Income Between Spouses
Another looks at income smoothing when one spouse retires earlier than the other. Instead of living entirely on the working spouse’s salary, the retired spouse starts modest RRSP withdrawals, often up to the basic personal amount or the top of their lowest tax bracket.
That reduces future RRIF balances, flattens lifetime taxes, and sets the stage for pension income splitting once both spouses are retired.
Convert a Spousal RRSP to a Spousal RRIF to Avoid Attribution
There’s also the couple who forgot to stop spousal RRSP contributions and worried they had boxed themselves in.
But by converting the spousal RRSP to a spousal RRIF, the minimum required withdrawals are not subject to income attribution, which allows required RRIF withdrawals to be taxed in the receiving spouse’s hands going forward. Crisis avoided.
Partial RRIF at 65 to Unlock the Pension Income Tax Credit
Some retirees intentionally open a small RRIF, even if they are not ready to convert everything.
Moving roughly $14,000 from an RRSP into a RRIF at age 65 allows them to withdraw about $2,000 per year (from 65-71) in eligible pension income, which is enough to claim the full pension income tax credit.
The rest of the RRSP stays untouched and flexible, avoiding larger mandatory withdrawals later.
Sensible if you think you might earn some part-time income and don’t necessarily want to be subject to the minimum required RRIF withdrawal on the full balance of your retirement account.
Optimize RRSP Withholding Tax for Better Cash Flow
Retirees using RRSP withdrawals for income quickly discover that mandatory withholding tax affects how much actually lands in their bank account.
- Up to $5,000 withdrawn: 10% withholding tax
- $5,001 to $15,000 withdrawn: 20% withholding tax
- Over $15,000 withdrawn: 30% withholding tax
At an institution like Wealthsimple, RRSP withdrawals that are spaced at least 60 days apart are not considered cumulative for withholding tax purposes.
For example, a retiree withdrawing $48,000 annually could take four $5,000 withdrawals (spaced 60 days apart) at 10 percent withholding, then two $14,000 withdrawals (spaced 60 days apart) at 20 percent. Total withholding tax would be $7,600, or about 15.8 percent.
At a bank that calculates withholding cumulatively, that same $48,000 withdrawn gradually over the year could see effective withholding closer to 26 percent. The tax owed at filing is the same, of course, but the cash flow experience is very different throughout the year.
Using RRSP Room to Offset Capital Gains in Retirement
Finally, there’s coordinating RRSP withdrawals with capital gains. Think of a retiree who owns a rental property or a handful of massively appreciated stocks in a taxable account.
Instead of converting to a RRIF right away, they draw modestly from their RRSP for a year or two, then sell the property or the concentrated stock position before starting government benefits, avoiding potential OAS clawbacks in a year of spiked income.
The capital gain is triggered intentionally. If RRSP room is available, they contribute to help offset the gain. If not, they may simply skip RRSP withdrawals that year to keep taxable income in check. The proceeds get reinvested into a more diversified, risk-appropriate portfolio, and the RRIF conversion happens the following year with a cleaner balance sheet.
Final Thoughts
I cringe whenever I hear people write off RRSPs as a tax trap waiting to spring at age 71. Timing matters. Nuance matters. Your personal situation matters. The age difference between spouses matters.
Understand that most RRSP problems aren’t caused by the account itself. They’re caused by default decisions or misunderstandings of the planning strategies available before it's too late to do anything about it.
Great tips Rob, as always, I’m using some already and will consider others…
By the way, just a minor ‘tweak’…
Just $12,000 (rather than $14,000) transferred to a RRIF at age 65, and earning a modest 4.1% should produce enough for the $2,000 annual draw for the 7 years.
Totally fair, Max. There should be some growth implied with that initial contribution.
Hi Robb
My thoughts are to make this number large enough so that I can make a transfer in kind from my RRSP with the same cash wedge percentage to mirror my RRSP holdings exactly. In my case I think $40,000 is about the right number to use, I don’t see any benefit to making this number any smaller
It can be even more granular than that, depending on where your accounts are. For example, in Questrade, I can move any assets/cash from my RRSP to a RRIF account and then withdraw as needed through the year. So for the pension income credit, I could just move 2K at 65, 2K at 66, etc., and leave the rest sitting in the RRSP account. I like the added flexibility doing it that way.
I do this as well, with TD. I think you can do it with any institution. Your RRIF can sit with any amount of money you choose to put in it (and take out) until mandatory conversion. I think that many people believe that you must convert your entire RRSP amount into a RRIF, even before age 71.
Great article as always, however, I would like to see more articles that apply to single people whose spouse has passed away and are retired drawing on their RRIF’s. Thank you.
I second this. Per the 2021 census, almost 40% of those over 65 are single, yet it’s a group that doesn’t generate a proportional amount of financial advice, and to add insult to injury, we miss out on the benefits of spousal RRSPs etc. I’d love to see more advice on ways to maximize our retirement income since our expenses are still typically 70% of couples.
I’m trying, Lynn, I swear: https://boomerandecho.com/weekend-reading-rrif-reform-fairness-for-singles-and-my-first-globe-op-ed/
Yes I agree! Single retirees can’t do income splitting or spousal RRSP contributions. What do we do?
Hi Connie, follow the other strategies mentioned which have nothing to do with whether you’re partnered-up or not.
You guys, I’m not gate-keeping strategies for singles – there just aren’t that many compared to strategies for couples. I agree, that’s not fair.
If you want to fight for change, join the Single Seniors for Tax Fairness and contact your local MP: https://www.singleseniorsfortaxfairness.com/
I think our government has to invoke the changes so the planners can actually write about it. Singles are not treated fairly during retirement. There needs to be rules for singles to will any RRSP/RRIF funds to any non-spouse. It could be children or a good friend. I guess that’s why it’s important to melt this money or move to unregistered as quickly and as efficiently as possible.
Ditto for being single
And here I thought I was being fair posting three strategies for couples and three strategies for singles…
Ya got me.
You certainly were, Robb. Proof that this information is required is evidenced by those who think that if any advice is not directly applicable to their situation, it is, somehow, deficient.
Hi Helen, did you happen to catch this post from last year: https://boomerandecho.com/finding-financial-clarity-after-losing-a-spouse/
There was also this case study: https://boomerandecho.com/weekend-reading-a-rrif-case-study-edition/
Thank you for the links Robb.
Great ideas. I was particularly interested in the “contribute to a spousal RRSP after 71”. Does that mean that a 72 year-old who no longer has earned income can still contribute to a spousal RRSP for the younger spouse if he still has contribution room left at retirement?
Hi Karen, that’s exactly right!
Hey Robb – good article, thanks! The 60 day period between RRSP withdrawals at Wealthsimple that you mentioned – where did you find this info and is it a new policy? I can’t see any mention of this in their Help resources. Also, I made several 5K RRSP wihdrawals there last year and didn’t run into any cumulative increases in the withholding taxes on any of those – and some were definitely less than 60 days apart.
In general, I find the high levels of withholding tax rates for RRSPs designed to be punitive. Any reasonable method of keeping them at the 10% level as long as possible is appreciated!
Hi Peta, thanks!
It’s definitely new. You can find that language when you go to make an RRSP withdrawal and click on the question mark beside withholding tax.
I noted it on a client call last week and thought I’d share. My understanding was they didn’t used to have any cumulative period, which is much better (I agree!) but maybe they got into trouble for it because most banks do it cumulatively.
Thanks Robb, I see that new condition now. I guess it would also show up directly in the amount in the withholding tax field – at least it’s all directly visible here in the UI at the time of withdrawal. I also have accounts with Questrade and don’t see the tax withheld there until 2-3 days after the transaction request.
Oy vey, another win for arbitrary restrictions. So, it looks like the only guaranteed way of keeping the withholding taxes at the 10% minimum through the year would be to – drumroll – open as many RRSP accounts in different institutions as there are planned 5K withdrawals. I’m sure that falls squarely under the umbrella of “rational financial planning”…
Withholding taxes are simply pre-payments towards your taxes owing, they are not your actual tax. Trying to game the system and reduce withholding taxes by spreading RRSPs/RRIFs across many institutions could result in a rather unpleasantly large tax bill when you actually file your taxes.
Yeah, no. This is a pretty typical response when withholding taxes are mentioned online, but it misses the real issue. Which is that the cumulative treatment of withholding taxes is grossing up your income for the year unnecessarily. And that increases your final tax bill for the year, also unnecessarily.
As an example, let’s say you want to have 50K in net income for the year. If you do a single RRSP withdrawal to cover this, the 30% withholding tax rate will apply – so your institution will withdraw 71.5K (rounded), with 50K going to you and 21.5K to taxes. Call this scenario A.
Scenario B just looks at how much gross income is actually needed to generate 50K in net income. In BC, where I live, it was under 60K when I did this calculation about a year ago.
So the gross income in A is about 11.5K higher vs. B to get the *same* net income. You never needed the 11.5K for real expenses, but your final Tax Payable amount in A will be higher by (11.5K * you marginal tax rate) vs. B. The end result is you lose about 3.2K in A vs. B at tax time, only because you had to “prepay taxes” at unnecessarily high rates.
On top of that, your RRSP balance in A is 11.5K lower than in B – and you’re losing any future tax-sheltered growth on those assets.
The 30% is the worst case scenario, but when the institution starts to treat individual withdrawals through the year cumulatively, the problem is there.
So the goal here in trying to keep the withholding taxes to minimum is not to “game the system”, but to withdraw only what’s necessary for real expenses.
Peta, You should be using CRA Form T1213 to apply for a reduced withholding tax if you are able to properly forecast you estimated overall tax burden on targeted income. That would enable $50k of RRIF withdrawals with 10% withholding tax (assuming the 10% is your end-end average rate).
Just a note about opening RRSP’s at multiple institutions. I don’t see it advertised too well, but many financial institutions charge a fee for each withdrawal from an RRSP account. This is on top of the tax witholding. Make sure you don’t get caught in that nasty trap!
For example, Questrade charges $50 for each partial withdrawal, $100 for a full withdrawal. Tangerine does not charge anything and neither does Wealthsimple.