Minimum RRIF Withdrawals
Minimum withdrawals from a Registered Retirement Fund (RRIF) are required every year. For example, should you convert your Registered Retirement Savings Plan (RRSP) to a RRIF at age 71, your withdrawals at age 72 have to be at the least 5.28% of the prior 12 months’s year-end balance.
In your 91st 12 months, Robert, you will need to achieve at the least 11.92%. The withdrawal rate increases yearly, and in case your RRIF doesn’t consistently generate an annual return of greater than 10%, your account will likely lose value in your 80s.
The 10-year annualized returns for the TSX and S&P 500 over the past decade were 12.43% and 9.81%, respectively (as of March 27, 2026). This includes dividends and, within the case of the S&P 500, is converted into Canadian dollars. Most RRIF investors don’t bet on stocks, and most investors don’t retain 100% of the returns that the market offers. But an aggressive investor could actually maintain or increase their RRIF value over an extended time frame if the markets cooperate, as they’ve recently.
In recent years there was lobbying to lower the required minimum payout of RRIF accounts. The required minimum distribution (RMD) for U.S. retirement accounts is lower than for Canadian RRIF accounts. Still, some retirees can have reasons to strategically withdraw greater than the minimum.
OAS reclamation
One thing a retiree must pay special attention to when making additional RRIF withdrawals is the Old Age Security (OAS) reclaim. If your income exceeds roughly $95,000 in 2026, you might be subject to a pension recapture tax of 15 cents on the dollar, which, together with regular tax rate increases, effectively increases your tax rate by 15%.
Compare one of the best TFSA rates in Canada
Depending on the province or territory of your residence, you could be subject to an efficient tax rate of greater than 60% in case your OAS is reclaimed.
You mentioned, Robert, that you simply are usually not qualified for the OAS. I think your income is over $150,000 per 12 months, which is pretty high for a 91 12 months old.
A numerical example
Here’s a straightforward example of why additional RRIF withdrawals might make sense for somebody such as you.
The article continues below promoting
X
If your income is $150,000 and you’re taking a further $50,000 in fully taxable RRIF withdrawals, your additional tax could possibly be about 40% depending on where you reside. That would mean a $20,000 tax on the $50,000 withdrawals, leaving you with $30,000 left after taxes every year. After 5 years, you should have withdrawn a complete of $150,000 after taxes.
I hope you reside to be 101, Robert, but for simplicity we are able to assume that somebody of their 90s only lives for five years. If someone with a big RRIF account and an otherwise high income dies after five years, all or a part of their RRIF balance could possibly be taxable at over 50%. Here too, there are differences between provinces and territories.
If you as a substitute forgo the 5 years x $50,000 in additional withdrawals and as a substitute leave $250,000 in your RRIF, your estate could only be $125,000 after taxes. In comparison, annual withdrawals of $50,000 over the past 5 years totaled $150,000 after taxes – a greater result.
This example ignores investment growth, but when the time horizon is brief or the tax difference during lifetime and death is important, this extra withdrawal strategy could also be worthwhile.
Your strategy of maxing out your Tax-Free Savings Account (TFSA), Robert, is smart. If you’ve more money that you simply’re putting in a non-registered account, you would possibly think about using it as money in your children or grandchildren as a substitute. Of course, you desire to ensure you’ve enough savings for the remainder of your life – including a buffer for long-term care costs – before giving any money away. You may have the ability to expect your kids or grandchildren to cover these costs should you give away an excessive amount of.
As you mentioned, a present is tax-free in Canada. Withdrawals from an investment account could also be taxable to the account holder. However, a present itself just isn’t taxable. An exception may apply to a U.S. citizen who could also be subject to U.S. gift tax regulations.
Summary
My quick math suggests that your strategy of creating additional RRIF withdrawals may lead to you paying less lifetime taxes, Robert. But you must think twice about your individual financial situation.
Do you’ve an issue about your personal funds? Submit it here.
Read more from Ask a Planner:
