FIRECA
Canadian Retirement Planner
The order you draw from your accounts in retirement isn't just preference — it directly affects your tax bill, OAS clawback exposure, and how long your money lasts.
Unlike accumulation — where you generally just want to maximize tax-sheltered contributions — decumulation requires careful sequencing. Different account types have different tax treatment, different flexibility, and different implications for government benefits.
| Account | Withdrawal Tax | OAS Impact | Flexibility |
|---|---|---|---|
| TFSA | Tax-free | None | Full — any amount |
| Non-Reg | Capital gains (50% inclusion) | Partial | Full |
| RRSP | Full income tax | Yes — counts as income | Full (before 71) |
| RRIF | Full income tax | Yes — counts as income | Minimum required |
| LIF | Full income tax | Yes — counts as income | Min and max limits |
| Corporate | Dividend/salary tax | Depends on structure | Flexible extraction |
For most Canadian retirees without unique circumstances, a commonly suggested drawdown order is:
Capital gains are taxed at only 50% inclusion. Drawing non-reg first preserves tax-sheltered accounts for continued growth.
Extract corporate funds before drawing personal registered accounts — corporate growth is taxed at higher corporate rates if left too long.
Draw LIF up to the maximum allowed each year to reduce the locked-in balance that will generate forced income later.
Take mandatory minimums but try not to exceed them unnecessarily if doing so would push income into higher brackets or trigger OAS clawback.
Draw RRSP in low-income years to fill brackets before mandatory RRIF minimums arrive. The classic "meltdown" strategy.
Preserve TFSA as long as possible. Tax-free compounding in TFSA is extremely valuable — and TFSA withdrawals never affect OAS.
Two account types force minimum withdrawals regardless of your plan:
These forced withdrawals are why proactive RRSP/RRIF reduction before age 71 — the meltdown strategy — is so powerful. Smaller RRIF balances mean smaller mandatory taxable withdrawals that could otherwise push you into higher brackets or trigger OAS clawback.
FireCA's Draw Order tab lets you drag and reorder your withdrawal sequence and see the estimated tax drag for each strategy — directly reflected in your retirement runway.