I just turned 64, meaning that next time this year I will start collecting Old Age Security. Put that together with my mediocre CPP payments and I will have a $20,000’ish pension. Over the next week or two I will also create a RRIF from my Canadian RRSP account. Creating a RRIF at age 65 can have many benefits that I will outline below. It starts with taking advanatage of the first $2,000 pensionable earnings credit. I will also be able to take advantage of other credits just for turning 65. Yes, I’m getting ready to RRIF.
As always the following is not advice.
When to take CPP and OAS can be one of the biggest decisions you make in retirement. We can delay CPP from age 65 to age 70 and receive 42% more. If we delay OAS from age 65 to age 70 we’ll see a 36% boost. That’s a massive boost of pensionable earnings. And of course that income boost gets doubled up for those in a spousal situation.
Only the software knows
Using the MayRetire retirement calculator I ran a plan for a spousal situation, where they both have generous CPP payments and full OAS payments. First off, the delay CPP and OAS to age 70 plan created a final estate value that is $181,000 greater. The plans run to age 95. Total government benefits total $1,969,000 vs $1,672,000. The delay model delivers $297,000 more in government benefits.
And using the Workspace plan comparison feature, here’s how the government benefits at age 65 vs age 70 shape up. You can also see where you plan breakevens might be.
It is essential that retirees and near-retirees run the retirement cash flow software.
Only the software knows.
Dale
At Retirement Club for Canadians we use MayRetire. We teach members how to use MayRetire and how to implement and optimize your personal retirement plan. Yes, you can DIY your retirement if you choose to do so.
You may also choose to consult with an advice-only planner.
Of course when to take CPP and OAS is just one of the core decisions. The cash flow plan will lay it all out for you. You’ll discover when to take your government benefits and when and how to draw down from your investment accounts, employer pensions and other amounts.
My OAS and CPP decisions are based on our cash flow plan that includes longevity projections.
MayRetire retirement calculator
You can sign up for MayRetire using this link. There is a free-use version and MayRetire Plus. You’ll save $20 and pay just $59 for an annual subscription.
Here’s a must read post – The simple strategies that set you up for retirement success.
Getting ready to RRIF
Back to me, and getting ready to RRIF. Given that I don’t have an employer pension, it’s a given that I open a RRIF to at least take advanatage of the first $2,000 pensionable earnings credit. It’s official name is Pension Income Amount. That could earn you a federal tax break up to $280. Most provinces also tack on a tax credit.
When I open a RRIF I will see other benefits. I will no longer face withdrawal fees for removing monies from an RRSP. At my brokerage it is $25 per removal transaction.
I will also not face any withholding taxes for an amount up to the minimum withdrawal rate. Remember, for a RRIF we have to at least withdraw the required minimums. Keep in mind this is only a tax deferral, I will still have to settle up any taxes owed at tax filing time.
RRIF Payment Schedule – Age Range 60 to 69
| Your age – or your spouse’s | Annual RRIF minimum withdrawal |
|---|---|
| 60 | 3.33% |
| 61 | 3.45% |
| 62 | 3.57% |
| 63 | 3.70% |
| 64 | 3.85% |
| 65 | 4.00% |
| 66 | 4.17% |
| 67 | 4.35% |
| 68 | 4.55% |
| 69 | 4.76% |
A regular pay cheque
And one of the main reasons to start a RRIF is to get a regular monthly pay cheque. I’ll estimate how much I might need and move that appropriate amount to the RRIF. In 2027 I’ll have CPP/OAS self-employment income and the RRIF amount.
For example, if I want $15,000 annual that does not face withholding taxes, I’ll need a RRIF of $375,000.
$375,000 x .04 = $15,000
That will generate a $1,250 monthly payment. And yes, the payment will increase each year as per the RRIF required minimums. The rate of RRIF increases is certainly above the recent inflation rate, and that’s more than fine. If my total income increases above spending needs, the money can go to good use. Here’s one example.
Contributing to your wife’s RRSP while you’re still retired?
We have a nice tax arbitrage opportunity. I also have TFSA room. Funds that are not required for spending can move to my wife’s RRSP or the tax free environment. I am in a very low tax stage as our spending needs are quite low and my wife is still working.
I measure my current tax rate against the projected tax rate in retirement.
Must read: Six ways to lower taxes in retirement.
I will get an $9,448 age credit next year as well, just for being “old”. 🤣 👍 We get the full credit for the year even if we turn 65 late in the year.
Join us for a Retirement Club Tour
You can join Retirement Club on the overview page, but if you’d like to know more, you can join us for a Zoom Tour the week of November 3. We’ll take you through the experience.
Hit the Contact Dale form at the top right of this page to sign up.
More Sunday Reads
At Findependence Hub, should we worry about the midterm elections in the U.S.? That happens on Tuesday, November 3.
On Twitter/X I weighed in on the topic with this post …
Dividend Hawk checks out his portfolio for the week. It’s a packed-post with earnings season in full swing.
Dan at Stocktrades takes a look at Canadian oil and gas stocks.
For our Canadian RRSP portfolios the oil and gas stocks have contributed greatly to the recent outperformance. Year-to-date …
The Canadian RRSP is in racing Green, the TSX Composite in blue. I cover off Canadian stock portfolios and more at Wealth Club.
GenYMoney takes a look at the recent bank cash promos. It can be a good idea to squeeze as much as you can out of your cash and short term bonds.
Here’s a post that covers all of the cash and GIC options and current rates.
At Tawcan, here’s Bob’s 2026 Goals and Resolutions update.
Canadian Financial Summit
The Canadian Financial Summit was a great success. Kyle at the Summit puts it this way – This Virtual Summit will cut through the fog of confusing financial jargon and build the confidence needed to seize control of your personal finances. Each speaker will pull back the curtain on their unique area of expertise. With their actionable advice and attention-grabbing speaking styles, these experienced Canadian gurus will help take your money game to the next level – no matter if it’s your first day at the financial dojo or if you’re already a 3rd-degree blackbelt in financial literacy.
You can acces your free pass or all access pass through this link.
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Thanks for reading. Freel free to reach out with any questions.
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