Weekend Reading: RRIF Reform, Fairness for Singles, and My First Globe Op-Ed
I had an unexpected opportunity this week. I wrote my first op-ed for The Globe and Mail, and the topic was something that has become a recurring feature of Canadian retirement debates: proposals to reduce or eliminate the minimum RRIF withdrawal percentages.
The idea is often framed as a compassionate fix to protect seniors from outliving their savings, but in practice a blanket reduction would mostly benefit wealthy couples and the financial industry, not the average retiree politicians say they want to help. That became the focus of the piece.
After working with hundreds of retirees on their actual withdrawal plans, I have never seen a client with modest savings worry about the minimum. They almost always withdraw more than the minimum to fund their lifestyle. For these households, reducing the RRIF minimum does nothing.
Related: Your Ultimate Guide to RRIFs
Meanwhile, if you don’t need the income, you can simply move a portion of the mandatory withdrawal into a TFSA in January and keep it growing tax free. The forced spending narrative falls apart pretty quickly.
So, if reducing RRIF minimums doesn’t help the people it is supposed to help, who does it help? A couple with large RRIF balances and access to income splitting can earn roughly $186,000 dollars of total retirement income before crossing the OAS clawback threshold, because the clawback starts at about $93,500 dollars per person.
A single retiree has no ability to shift income to a lower bracket spouse. That is a huge structural disadvantage.
This matters because singles do not spend half of what couples spend. Fred Vettese makes this point clearly in Retirement Income for Life. When one spouse dies, household spending typically falls by only about 30 percent, not 50 percent.
The grocery bill drops, sure, and you’d buy one plane ticket instead of two, but housing costs, property tax, insurance, maintenance and utilities, hotel rooms, etc. are basically unchanged. That implies that a single retiree generally needs to spend about 70 percent of what a couple spends to maintain the same lifestyle, yet pays higher taxes on the same income and has none of the advantages of splitting.
There is another feature that rarely gets mentioned in the RRIF debate. A couple can choose to calculate their RRIF minimum using the younger spouse’s age. If one spouse is 71 and the other is 65, the RRIF minimum drops from 5.28 percent to 4 percent simply by checking a box. This is already built into every financial institution’s RRIF system. A single retiree has no equivalent option. They pay higher taxes on the same savings, face a greater likelihood of OAS clawbacks, and are forced to pull a higher minimum even if they do not need the money.
With that in mind, my op-ed suggested a simpler and more targeted reform. Reduce RRIF minimums for single retirees by 25 percent.
In practice that means letting a single retiree use age 65 to calculate their RRIF minimum, which would lower the age-71 minimum from 5.28 percent to roughly 4 percent.
It feels like a fair place to start. It softens the impact of mandatory withdrawals for the group that is structurally disadvantaged, without creating a broad giveaway to households that already benefit from pension income splitting, greater flexibility to stay under the OAS clawback threshold, two-times the TFSA room, and a lower RRIF minimum through the younger spouse rule.
The encouraging part is that this requires no new systems or bureaucracy. Financial institutions already have a field to enter the age used for calculating RRIF minimums. For a couple, that is often the younger spouse. For a single retiree, age 65 would simply be used in that same field. One small change that creates a slightly more balanced outcome.
The response to the piece was thoughtful and positive, particularly from single seniors who are living this gap, and from other advice-only planners who see the same patterns every time a spouse dies.
It’s a good reminder that not all retirement policy questions are about draining the RRSP too fast. Sometimes they are about who gets the benefit of the rules we already have, and who gets left out. If Canada is going to revisit RRIF rules, I think fairness for singles is a better starting point than a blanket reduction that mostly preserves large RRIFs.
This Week's Recap:
Last week I wrote about why so many Canadians take CPP early even when they shouldn't.
Earlier this week I got reflective about my impact on the Canadian personal finance landscape and shared some ideas that I want more Canadians to embrace.
Since that Globe & Mail piece resonated so well, I'm hoping to contribute a bit more frequently in the new year – so stay tuned for that.
Promo of the Week:
I continue to say that Wealthsimple offers the best experience in Canada for most DIY investors or robo-advised investors. I say “most” because the self-directed platform is still relatively new and had a few issues to work out. Self-directed spousal RRIFs was one of those missing pieces, but that has seemingly been solved now according to a few emails from readers and clients.
If you're the type of investor who just wants to buy and hold a simple portfolio of Canadian-listed ETFs, then I'd highly recommend making the move to Wealthsimple. For retirees, Wealthsimple offers an incredibly easy-to-use platform where you can automate most things and they do not ding you $25 to $50 for partial RRSP withdrawals (they're free).
It's a perfect place to implement a one-fund solution (your risk appropriate asset allocation ETF) during your working years, and my recommended two-fund solution (adding a 10% cash wedge) in retirement.
Right now, you can get a new iPhone, Macbook, or both when you transfer or deposit up to $100,000 or more into your Wealthsimple account.
- Open a Wealthsimple account (here, use my referral link and get an extra $25: http://wealthsimple.com/invite/FWWPDW), and;
- Once you’ve opened an account, or if you already have an existing account, you’ll want to register for the new Apple promo offer: https://www.wealthsimple.com/en-ca/apple
- Transfer or deposit $100,000+ into almost any account within 30 days
One thing of note when transferring registered accounts to Wealthsimple (or any other platform) is that you'll need to once again select your beneficiary or successor holder. And, if you're a Wealthsimple customer, you've probably noticed that it's not obvious where to add a successor holder to your TFSA (and you should!).
No problem. Just visit this link where you can designate contingent beneficiary(ies) and/or successor to your registered accounts at Wealthsimple
Wealthsimple: Designation of Beneficiary(ies) for Registered Plans
An easy way to think about these designations is that a beneficiary gets the money while a successor gets the account.
Weekend Reading:
Speaking of RRIFs, Russell Sawatsky explains how much tax you should withhold from your RRIF payments.
CRA released the new tax numbers for 2026. Here’s what you need to know for next year.
Here's how donating appreciated securities in-kind boosts tax benefits.
Damir Alnsour debunks the seasonal myths around a Santa Claus rally, the January effect, and predictive Super Bowl winners. Great piece!
Canadians are too obsessed with buying houses. Here's the case for lifelong renting.
A wonderful conversation between David Chilton and Morgan Housel on the psychology of money and the art of spending:
The federal government is pushing forward on banning account transfer fees. Most financial institutions charge around $150 to transfer out funds to another institution. On the one hand, most receiving institutions will usually pick up the tab, but usually have a minimum threshold of $25,000 or more. This fee ban will help people move those smaller accounts to better consolidate accounts and platforms.
Mark McGrath explains the anatomy of a pig butchering scam after a neighbour's father lost $100,000 to one such scam. Such a shame.
Advice-only planner Jason Heath explains how a pension buyback works and whether it's a good idea.
Finally, is it time for behavioural nudges to become shoves? Preet Banerjee weighs-in on the effectiveness of opt-in savings plan nudges.
Have a great weekend, everyone!
I think this desire that civil service has to micromanage and set minimums has a lot to do with their belief that they are better than you at managing your pension savings. Its one of the reasons our tax system and incentives are so confusing and productivity is so low.
You say that the real problem with removing minimum withdrawals is that people will start fiddling to max OAS. I think you are right. Makes it obvious that the real problem is with OAS; people seem to focus on maxxing this benefit and ignore everything else. And its acting as a kind of penalty for professionals who work longer and invest more. And its unsustainable. The answer seems obvious: kill OAS and remove RRIF thresholds altogether.
I don’t get the pitch that “this will help the rich”. Even if true, is that a bad thing? The objective should be to make things simpler and incentivize productivity and savings.
OAS needs an overhaul, no doubt. Killing it? That’s a bridge too far (and political suicide). We couldn’t even push the starting age to 67 without a revolt and regime change.
Bringing down the income threshold, or having it apply BEFORE splitting, might be a better approach.
As for targeting high income retired couples, I’m not sure how that affects productivity at all. A bunch of seniors with fully maxed TFSAs and still living in their too-large-for-them family home is not increasing economic productivity or helping inequality.
No shade against seniors who are doing that – but I can see the growing discontent about also giving that group $18,000 of government assistance.
Productivity is being hurt by screwed up incentives. Engineers, accountants, doctors and other professionals are effectively incentivized to reduce hours and quit early. Complexity of the system, combined with the fact that “boomers with high income” are seen as public enemy number one and generosity of numerous income support schemes = poor productivity.
Micromanaging peoples retirement savings, forcing the schedule is a minor irritant and disincentive to work/contribute to RRSP for longer but its a long list. OAS, which requires zero contribution from individual is another disincentive. They work in tandem and alongside other punitive measures targeting people who put effort in education and work hard.
Will it be unpopular to kill OAS? Of course. Handouts are impossible to remove once introduced. But then people shouldn’t complain about lack of housing, doctors and the “Boomers”. Boomers were more productive when building houses so the houses were cheaper.
It might be good to recall that OAS is an Old Age Security program with a goal of keeping people from being homeless and starving. Many people need that program’s income to survive economically after working a lifetime in lower-paying jobs resulting in CPP payments far below the maximum. Forget TFSA and RSP savings, a lot of people struggled to keep bills paid through their lifetime because of not having access or resources to set them up for higher income employment. Eliminate OAS and there will be an increase in homeless and starving seniors. There will always to those who will manipulate any system for their advantage and maybe the real problem is the sense of entitlement higher-income retirees might be suffering from: a belief that they DESERVE all those OAS dollars. I work with quite a few professionals with a wide age range, most are not planning on cutting productivity or retiring early after the past few years of inflation. It’s a different world.
Speaking of reforms, how come DB pensions can take advantage of income splitting before 65, but DC pensions, RRIF/LIF cannot? Also seems unfair, especially since most employees these days fall in the DC camp.
You also get pension tax credit which you can claim on your early DB pension at 55 or 60 but RRIF would only be eligible from 65. Its another little tax advantage government employees get once they retire.
Indeed, this is one of my pet peeves! Income splitting should be available for everybody at the same time!
I found your article very interesting. I have one comment or question and that’s regarding the spousal transfer to Wealthsimple. The past week I’ve tried to move the latter and have talked to some of W/S advisers in this regard but apparently it’s not possible right now. Your article states your sources have found a way to do this …could you elucidate?
It sort of is possible. My experience, or advice from Wealthsimple (within the past 2 weeks), is that one can transfer ONE RRIF for a person, either a regular (under their normal process) or a spousal RRIF (under a so-far-beta program). In my case, my spouse has both a regular and a spousal RRIF, and Wealthsimple will happily transfer in one but not both, or will transfer a single one in after they are combined into a single RRIF by the transferring institution (which, in my case, the transferor will not do per their internal policies — the combination is permitted under certain circumstances under the Income Tax Act).
If you have only a single spousal RRIF, ask your Wealthsimple advisor about the beta program.
Thanks Rob for the quick follow up. Yeah I’m the No Go scenario because I’ve already transferred my wife’s regular RIFF and wanted to do the spousal as well but obviously I can’t at this point.
I’ve been with your blog since its inception, and I’ve always found your advice helpful…keep up the good work!
Umm . . . just to clarify — this is not Robb that gave that response!
Not sure that Robb was referring to transferring a Spousal RRIF, to WS, but rather converting an existing self-directed Spousal RRSP to a self-directed Spousal RRIF, which wasn’t available to do until recently. Previously, the only option was to convert it to a managed Spousal RRIF. That self-directed option is now available.
Thanks Robb for the info and help you provide with your articles!! They have been instrumental for our successful retirement.
That is my understanding as well. I have an existing spousal RRIF at TD and Wealthsimple has kindly put me on a wait list to be informed when they are finally able to transfer in existing spousal RRIFs from other institutions. They are able to transfer in existing spousal RRSP accounts and when the investor converts that to a spousal RRIF, Wealthsimple can do that but they cannot yet bring in existing spousal RRIFs from another institution. Here’s hoping they figure that out around the time they offer another 1% or 2% for transferring in accounts. That was the best incentive.
It is hard to have any sympathy for those who fall into the OAS claw back category. I think the OAS should be increased for those who really need it also. (BTW I do not fall into either of these.)
I believe more and more of the younger generation are not only having trouble saving for the future, living pay cheque to pay cheque, but will need to keep working past the 65 year old threshold. I hope I am wrong.
I agree (I also will not benefit from either), however my preferred approach is lower the thresholds for OAS clawback, but only impact couples (i.e. not for singles), and use the savings to boost GIS (for both couples and singles). Basically, I’m in favour of a mechanism that moves OAS funds from couples that are better off to couples, and singles that are not.
Agreed. The clawback threshold should be moved back a tax bracket and OAS phased out more aggressively once income hits $100k or so.
In case anyone is curious, the clawback threshold for 2025 starts at $93,454 and ends at $152,062.
That implies that a couple each earning $150,000 of taxable income will also get a few bucks of OAS. That’s insane.
I have no problem with OAS clawback, fair is fair after all. I hate that although I continue to work to build for my retirement, I will have to withdraw from my RRIF and pay tax at the highest tax rate next year. I want to defer taking RIF until I’m in a position to retire!
Congratulations on the article and thanks for looking out for us singles. Singles get a bad rap in a number of economic and societal areas.
Thanks again for advocating for singles, Robb. Is there any way we can advocate for ourselves as well? Write to our MPs, the finance minsiter or the CRA? Maybe if us singles remind the government of our existence, we can help push this idea into reality.
See below – they have templates for emailing MP’s etc but so far have not got a lot of traction (from what I see)
Single Seniors for Tax Fairness (SSTF) is a Canadian nationwide movement devoted to lobbying for revisions to the Income Tax Act to provide fairness and equity for single seniors, including lifetime single, widowed, divorced or separated seniors aged 65 plus.
It’s too bad your Globe and Mail link is paywalled. Another financial expert puts gift urls into his newsletter when he has an article in the Globe so his subscribers can read it. Maybe you can do that in the future?
We need to support our Canadian media. I am guessing they paid the author for his valuable contribution, so I don’t think it is unreasonable for us to pay the provider to access quality content.
True, but I do pay for other Canadian newspapers. Not everyone can or wants to pay for them all.
The G&M currently offers .99 cents/week for 24 weeks, cancel anytime, for digital access. I took advantage and am loving the content.
https://subscriptions.theglobeandmail.com/digital?utm_cmp=footer#:~:text=The%20Globe%20and%20Mail%20digital,Cancel%20anytime.
I wonder, in our lifetimes, if a (print) newspaper will disappear.
Oh for sure! Once all the boomers die off.
One simple question. Doesn’t minimizing RRIF withdrawals eventually lead to a much higher tax bill upon death of the second spouse? I wonder how that trade off works out. Leaving some money on the table due to clawback vs what additional taxes you end up paying to the government eventually.
Hi Bruno, it’s true that minimizing RRIF payments will lead to a higher RRIF value upon death, and potentially higher taxes in the estate (the remaining RRIF balance is deemed take as income on the terminal tax return).
However, I’ve modelled this out many times and while it looks more appealing to drain the RRIF fully prior to death to minimize estate taxes, you will almost always have more after-tax money in the estate by preserving the RRIF for longer. It is a tax-sheltered account, after all.
I just modelled this for a widow who had a large RRIF of $1M, a fully maxed TFSA, and $1M in a taxable account. All of her OAS was being clawed back (rightfully so).
She wondered about draining the RRIF faster and adding to the taxable account to avoid a large tax bill in the estate. I modelled out three scenarios and the best outcome, at any age of death, was to minimize the RRIF withdrawal.
“SINGLE SENIORS FOR TAX FAIRNESS” is a Canadian movement devoted to lobbying for revisions to the income tax act to provide fairness and equity for single seniors. They have a website and a Facebook page. They currently have a petition to the government of Canada that you can sign until December 28/25.
https://www.singleseniorsfortaxfairness.com/
Rob, you said “That implies that a SINGLE RETIREE GENERALLY NEEDS TO SPEND ABOUT 70 PERCENT OF WHAT A COUPLE SPENDS TO MAINTAIN THE SAME LIFESTYLE, YET PAYS HIGHER TAXES ON THE SAME INCOME and has none of the advantages of splitting”.
Rob, you said “After working with hundreds of retirees on their actual withdrawal plans, I have never seen a client with modest savings worry about the minimum. THEY ALMOST ALWAYS WITHDRAW MORE THAN THE MINIMUM TO FUND THEIR LIFESTYLE. For these households, reducing the RRIF minimum does nothing”.
Rob, you said “With that in mind, my op-ed suggested a simpler and more targeted reform. Reduce RRIF minimums for single retirees by 25 percent”.
I’m saying the RIFF max or minimum is not the issue, it is the fairness of taxes, married or single.
Advocate for fairness, that’s the issue. Reducung RIFF minimums does nothing, if anything singles will need more anyway, not less……. Taxes Rob, write-offs for singles.
P.S. love your articles.
Hi Gordon, thanks for your comment. My statement about my “regular” clients drawing more than the minimum was referring to most couples I work with. Not necessarily singles.
I don’t see a lot of OAS clawback with my clientele but when I do it is almost always a single or a recent widow or widower who can’t benefit from pension splitting.
Hi Robb,
An excellent and logical assessment of the issue/problem (as always!).
Your recommendations here should be given serious consideration to ‘level the playing field’ for individual/single taxpayers rather than the current skewed handling.
Thanks for the link to the Wealthsimple beneficiary designations with Docusign. One thing that was not clear at the end of the process is whether the signed forms are submitted automatically to Wealthsimple, or whether any further follow-up is required. (They emailed me the signed forms…)
Thanks again for all you do!!!
Got a confirmation email a few hours later that the Beneficiary info has been updated… so I guess that answers my question 🙂
Max
This is so refreshing, finally someone who’s thinking of the forgotten single demographic. I’m so glad to see an article that speaks to this large and growing demographic. They make up a big chunk of the population yet the majority of financial articles only speak to ‘couples’
I’m a long time follower of your blog and really love hearing your perspective on financial matters. You seem to put a lot of thought into your posts and I like that you not afraid to express your honest opinion
Thanks for the excellent, thought provoking article. I think your recommendations are fair and spot on!
I don’t see the logic behind providing single people the same “opportunities” as married/commonlaw couples. The assets of a couple are owned equally (unless there is a prenup or some other arrangement) so the benefits / obligations should be available equally. If a single person wanted both the benefits and obligations, then they could enter into such a relationship. Without those obligations, why should a single person gain the “benefits”?