Will you overpay taxes in retirement?

Keep more of your money with a few simple steps.

• Our team provides strategies to grow and preserve wealth through investments, and we are not tax advisors. We recommend that you should always consult a tax professional concerning your own personal situation.

When people start retirement, many do not think about taxes until they are forced to. Unfortunately, taxes do not disappear when you retire. In fact, most sources of retirement income are taxable. This includes CPP, OAS, pension plans, RRIF withdrawals, and income generated from your investments. If you are not deliberate about planning withdrawals and leveraging expertise from trusted professionals, you can end up paying far more tax than you should. 

Meanwhile, the government will never remind you to search for ways to potentially save money on taxes. But this doesn’t mean you are on your own entirely. There are individuals in your corner. 

You worked hard to build your wealth. My goal is to help you grow and keep as much of it as possible, avoid surprises and stretch your money much further. Consider downloading the free resource, Five Steps for Tax Savings, which outlines the essential parts of this conversation in a simple, practical format. 

Avoid a higher tax bracket 

If you take CPP, OAS, or RRIF income without any planning, you can accidentally push yourself into a higher tax bracket or trigger unexpected taxes.



You cannot eliminate all taxes, but you can prevent unnecessary reductions in your income. In my experience, the most expensive tax problems happen when people realize too late that they could have made strategic choices earlier to put them in a lower and more advantageous tax bracket. 

Consider Withholding Taxes 

Many retirees decline withholding taxes from their CPP, OAS, or RRIF payments because they want the full deposit up front, and say they will deal with the tax later. 

It is easy to understand how your plan to set aside money to pay future taxes could unravel. Many underestimate the amount they will owe, or feel tempted to spend money in their account. Then April arrives, your tax bill hits harder than expected, and you are unprepared. 

In fact, I have heard of tax bills of twenty thousand dollars or more landing in client mailboxes. That’s why I suggest you ask the government to withhold the tax at the source, so it establishes a realistic cash flow and prevents stress and panic at tax time. 

Use an “Income Splitting” Strategy After Age 65 

If you are part of a couple, income splitting is one of the most effective tax savings strategies available. If both of you are age 65, you can split up to fifty percent of your eligible pension or RRIF income. This can significantly reduce your household tax bill. 

If one spouse has a much higher income, income splitting allocates a portion of that income to the lower earning partner. This can move both of you into lower tax brackets. The strategy requires the correct timing and the correct paperwork. Your tax advisor or accountant usually prepares the T1032 form, Joint Election to Split Pension Income, and includes it in your annual return. You can choose a different split percentage every year, depending on what supports your tax position. If you decide not to split income one year, you simply do not file the form. Both signatures are required because it is a joint election. 

Use the Pension Income Tax Credit 

This is one of the most overlooked opportunities. Starting at age 65, you can withdraw up to two thousand dollars per year from a RRIF or eligible pension income and claim the pension income tax credit. This creates a tax saving of several hundred dollars, and in some situations close to one thousand dollars. 

It is simple, predictable, and available every year after age 65. If you are not using this credit, you are missing a valuable benefit. I apply this credit for every eligible client. 

Continue Using Your TFSA Throughout Retirement

Your TFSA should remain part of your plan even after you retire. It gives you flexible tax-free withdrawals and tax-free growth. More importantly, TFSA withdrawals do not increase your taxable income. They do not trigger an OAS clawback, and they do not push you into a higher tax bracket. 

If you have the available cash, contribute to your TFSA every year. This is one of the strongest tools available to retirees, yet it is often underused. 

Follow a Tax-Efficient Withdrawal Order 

The source of your withdrawals affects how much tax you pay over time. A smart withdrawal sequence can protect your government benefits, stabilize your cash flow, and extend the life of your savings. 

Here is the general order that I encourage my clients to follow. 

1. Use your cash savings first. You already paid tax on these funds. Using them does not increase your tax bill. 
2. Withdraw from your non-registered accounts next. These accounts generate dividends, interest, and capital gains, which become part of your taxable income. Withdrawing from non-registered savings first helps you reduce future tax. 
3. Then draw from RRSP or RRIF income.This income is fully taxable. With proper planning, you can time these withdrawals to avoid higher tax brackets. 
4. Use your TFSA last. This gives your tax-free savings more time to grow. You can also use TFSA withdrawals for special purchases or unexpected needs because they do not increase your taxable income. 

Don’t Forget Common Credits and Deductions 

Many retirees qualify for more tax credits than they realize. These include:

• medical expenses 
• charitable donations 
• caregiver credits 
• certain professional fees or union dues 

You can review these details in the downloadable PDF. Always confirm your eligibility with a tax advisor who understands your situation. 

Understand Your Potential Future with Financial Projections and Modelling

Access sophisticated modelling tools to eliminate guesswork. Our team uses a proprietary projection system to map out your income, benefits, investment growth, taxes, and withdrawal strategy. This gives you clarity and confidence. It also identifies the most tax-efficient path for your next twenty to thirty years. With the projections and modelling, you can see exactly how your income will behave and where your tax risks appear. 

Keep More Money 

Managing taxes in retirement is about keeping more of the money you worked for. A few informed steps can save you thousands of dollars over time. You cannot control tax law, but you can control how well you prepare for it. 

If you want a clear, simple guide to the essential steps, download the free printable resource titled Five Steps for Tax Savings via this link, and refer to the simple checklist for your conversations with your tax advisor. 

If you would like a personalized plan, I am available to walk through your numbers with you. A strategic approach can help you protect your income and give you more confidence in your retirement years. 

• Remember, we are not tax advisors. You should always consult a tax professional concerning your own personal situation.