Many Canadians assume their tax bill will go down once they retire. But this isn’t always true.
In fact, many of our clients are shocked by how much tax they still owe in retirement, often because they missed key planning opportunities along the way.
The good news? With a few simple tax strategies, you can legally keep more of your money and reduce unnecessary taxes throughout retirement. Here are five retirement tax hacks based on the 2025 rules, plus one tip to leave more behind for your family.
Prefer to watch the video?
Hack 1: Don’t Wait Until 71 to Convert Your RRSP
Karen retired at 61 and planned to wait until age 71 to convert her RRSP into a RRIF. Her goal was to limit withdrawals and stay in a low tax bracket.
But when we ran the numbers, we saw a problem: her RRSP would keep growing, and when she was forced to convert at 71, the mandatory withdrawals would be much larger. This would push her into a higher tax bracket and trigger clawbacks on her Old Age Security.
Instead, we built a simple drawdown plan. We started modest RRSP withdrawals right away and spread them out over multiple years. The result? Karen saved over $210,000 in taxes.
If you’re in a low tax bracket today, consider making small withdrawals now rather than waiting. You may be able to fill up those lower tax brackets and reduce your lifetime tax bill.
Hack 2: Be Strategic With CPP Timing
Many retirees take CPP at age 60 simply because they can. But this can limit your ability to draw from your RRSPs efficiently.
One couple we worked with took CPP at 60. This created less room for RRSP withdrawals in their 60s, and when they hit age 71, the mandatory RRIF withdrawals pushed them into a higher tax bracket.
Another couple delayed CPP to 70 and used the income gap in their 60s to draw down RRSPs while in a low tax bracket. This gave them more tax efficiency and a larger guaranteed income from CPP later on.
If you don’t need CPP to meet expenses, consider delaying it. Use that time to reduce your RRSP balances before age 71.
Hack 3: Don’t Waste the Power of Your TFSA
Your Tax-Free Savings Account (TFSA) isn’t just for emergencies.
We worked with a client named Allan who was keeping his full TFSA, over $120,000, as a cash reserve. But he was unlikely to need all of it in an emergency.
We helped Allan split the account: $50,000 stayed in cash for emergencies, and the remaining $70,000 was invested. This gave him tax-free growth potential on funds he likely wouldn’t need right away.
Use your TFSA strategically. You don’t have to leave it all in cash just because it’s called a savings account.
Hack 4: Income Splitting Isn’t Automatic
In Canada, we don’t file taxes jointly. That means if one spouse has all the retirement income and the other has little to none, you could be paying more tax than necessary.
One couple came to us with this exact situation: one spouse had $130,000 of income while the other had very little. They were overpaying by $15,000 in tax each year.
We helped them convert part of the higher earner’s RRSP into a RRIF. After age 65, RRIF income can be split between spouses, even if one of them isn’t yet 65. This brought their incomes into alignment and significantly reduced their tax bill.
If you’re in a similar situation, consider whether partial RRIF conversion could help optimize your household tax burden.
Hack 5: Don’t Wait Until You Die to Transfer Assets
Many people leave their RRSPs untouched until they pass away, but this can result in a massive tax bill for your estate.
One client passed away with $1.2 million in his RRSP. Because no planning had been done, nearly half of it was lost to tax.
Had we started earlier, we could have used a RRSP meltdown strategy, making strategic withdrawals over time in lower tax brackets. It’s never too early to begin transferring wealth intentionally.
This might include helping adult children with TFSA contributions, paying down their mortgages, or setting up joint accounts. It also allows you to experience your legacy during your lifetime.
Final Thoughts
Retirement tax planning isn’t about one big decision, it’s about dozens of small, intentional moves that add up over time. The earlier you start, the more control you’ll have and the more tax you can save.
At Trans Canada Wealth, we specialize in building tax-efficient retirement income plans. If you’d like help putting these strategies into a plan tailored to your situation, book a free retirement tax planning call today.
If you need help planning visit our website and book a free consulting appointment with us.
