How RRSP and RRIF drawdown works in Canada
Through your working life you build up registered savings in an RRSP. By the end of the year you turn 71 it must be converted into a RRIF (Registered Retirement Income Fund) or used to buy an annuity. A RRIF keeps your money invested and tax-sheltered, but forces a minimum withdrawal every year: below 71 the factor is 1 ÷ (90 − age); from 71 it follows the CRA's prescribed table — about 5.28% at 71, rising steadily to 20% at age 95 and over. There is no maximum — you can take more whenever you need it. Every dollar you withdraw is fully taxable as ordinary income in the year you take it.
CPP and OAS
Two government pensions sit alongside your savings. The Canada Pension Plan (CPP) is based on your contributions — the 2026 maximum is about $1,508/month ($18,092/year), but most people receive less. Old Age Security (OAS) is residency-based, with a 2026 maximum near $743/month ($8,900/year) for ages 65–74. Both are taxable. Watch the OAS clawback: once your net income passes $95,323 (2026), OAS is reduced by 15 cents per dollar and disappears entirely around $152,000. Large RRIF withdrawals count toward that threshold; TFSA withdrawals do not. You can defer CPP and OAS as late as 70 for a permanently higher amount.
How retirement income is taxed
RRIF withdrawals, CPP, OAS and other income stack together and are taxed at combined federal plus provincial rates. Federal rates for 2026 run 14% up to $58,523, then 20.5%, 26%, 29% and 33%. On top sits your province's tax. Retirees get valuable breaks the calculator includes: the basic personal amount, the pension income amount on eligible RRIF income, and the income-tested age amount. Couples can also split eligible pension income to lower the higher earner's bracket and OAS clawback — a strategy worth discussing with an advisor.
Sustainable drawdown
The well-known "4% rule" came from US research (Bengen, 1994) and assumes a 30-year horizon. In Canada, with CPP and OAS providing a guaranteed inflation-indexed base, many retirees can sustain a higher starting rate from their own savings — but the RRIF minimum schedule means withdrawals (and the tax on them) rise sharply in your 80s and 90s. Drawing only the minimum tends to leave a residual balance late in life; drawing for a fixed lifestyle runs the pot down faster.
Frequently asked questions
How long will $500,000 last in a RRIF?
It depends on how much you draw, your investment returns, fees and whether you also receive CPP and OAS. A 4% starting withdrawal on $500,000 is about $20,000 in the first year before tax. Use the planner above to model your own numbers.
Are RRIF withdrawals taxed in Canada?
Yes — every dollar from an RRSP or RRIF is fully taxable as ordinary income, added to CPP, OAS and other income for the year. The TFSA is the exception: TFSA withdrawals are tax-free and don't count toward the OAS clawback.
What is the RRIF minimum withdrawal?
Once your RRSP becomes a RRIF (by the end of the year you turn 71), you must withdraw a minimum each year. Below 71 the factor is 1/(90−age); from 71 it follows the CRA table — about 5.28% at 71 rising to 20% at 95+. There is no maximum.
What is the OAS clawback?
OAS is reduced by 15 cents for every dollar of net income above $95,323 (2026), and fully clawed back by roughly $152,000 for ages 65–74. RRIF withdrawals count toward the threshold; TFSA withdrawals do not.
Assumptions & methodology
The model runs your RRSP/RRIF balance year by year to your plan-to age. Each year the target net income rises with inflation; CPP and OAS (if included) are uplifted the same way as a CPI proxy. RRIF withdrawals, CPP, OAS and other income are all treated as fully taxable. Tax is calculated using combined federal and Ontario 2026 brackets as a representative province, including the basic personal amount, the pension income amount, the age amount (income-tested) and Ontario surtaxes. Other provinces differ materially — Alberta and Quebec especially. We do not model the OAS clawback, provincial health premiums, or income splitting, and we don't enforce the RRIF minimum withdrawal (at low target incomes the legal minimum would apply instead). Figures use 2026 rates and are illustrations only. Always check current figures on Canada.ca and the CRA.