This post was inspired by Rhys Martell the founder of Well Built Wealth. Rhys does a wonderful job of educating Canadians on all things retirement. I’ve learned a bunch from Rhys and several other advice-only planners. Rhys offered a video (shown below) offering six ways we can lower our taxes in retirement. While it’s a fantastic video, it’s also a good opportunity to ‘put it in writing’, and at times with a little more context. Here’s the list – six ways to lower your taxes in retirement.
- Pension Splitting – up to half
Employer pensions can usually be split before age 65.
We can split RRIF income at age 65 and beyond. Remember we can’t split RRSP income, you need to transfer that desired ‘splittable’ amount to a RRIF.
LIFs, LRIFs and Annuities also qualify at age 65.
Use the T1032 Form Joint Election to Split retirement income.
This move could also help dodge some OAS clawback.
- Grab the age 65 Freebies
You receive the Age Amount simply for turning 65. For the 2026 Tax Year: The maximum amount increases to $9,208. It is income tested. The decline begins when your net income passes $46,432, phasing out completely at $107,819.
Pension Income Amount, of up to a $2,000 credit. This is a credit for the first $2,000 of pensionable earnings.
The amount must be in a RRIF or LIF or LRIF. Of course an amount in an employer pension also qualifies. Annuities at age 65 and beyond qualify.
Other credits: Disability, Medical Expense Tax Credit, Caregiver credit.
Unused disability credit can be transferred to spouse.
Medical Expense: Private Healthcare costs count towards the credit
- Get your withdrawal order right
Run the retirement cashflow software. Once again that’s a must. To get things right we must first know the optimal start dates for CPP and OAS, and then we’ll need to know how much to withdraw each year from our investment accounts and other sources.
A retirement cash flow calculator such as MayRetire lays it out in clear fashion. There is a free-use version and MayRetire Plus. We’ll teach you how to use that at Retirement Club.
“Only the software knows.”
- Master your TFSA
Use the TFSA for growth, feed the TFSA in retirement when possible. Most optimized retirement cash flow plans take money from registered accounts and fatten up the TFSAs.
Use the TFSA when you have an income needs spike – it’s a lever to be pulled.
- Strategically even out your income. Tax smoothing.
Lopsided tax paying couples pay too much tax, the more you can even out, the better.
Use the Spousal RRSP in the planning stages. This is very important if retiring before age 65. Pay attention to the attribution rule. That said, the attribution rule does not apply to RRIF withdrawal minimums.
Past age 71 you can make a spousal RRIF contribution to a younger spouse, until the year they turn 71.
You can even share your CPP, but must apply to Service Canada.
Lopsided income can create unnecessary tax. The goal isn’t necessarily to make incomes equal — it’s to smooth taxable income between spouses where it makes sense.
- Don’t stop at the RRIF minimum
You have compound growth and rising minimum withdrawal rates working against you to increase your tax bill, add in OAS that also shows up.
The best strategy for most is to take out more, earlier. As we’ve stated many, many times – some form of RRSP / RRIF meltdown is usually advantageous.
The RRSP / RRIF meltdown. A Canadian retiree’s greatest hack?
The above was ‘extracted’ from this wonderful video from Rhys at Well Built Wealth. I’ve added some additional context and links.
It simply confirms that at Retirement Club, we are certainly doing retirement right. Put the above together with this post –
The simple strategies that set you up for retirement success.
There is certainly some overlap between that post and the post your reading now, and the Rhys video. You now know some of the major moves that do the bulk of heavy lifting when creating an efficient retirement plan.
Check out Retirement Club for Canadians
And on the tax front of course there’s more we can and will do. We’ll manage capital gains, take advantage of the Canadian dividend tax credit when advantageous, use charitable gifting in the most advantageous way, we’ll manage final estate taxes, and more. At Retirement Club we’ll show you the way.
Reach out with any questions, and thanks to Rhys for the wonderful presentation.
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