The Best Large RRSP Withdrawal Strategy for Long-Term Wealth

December 31, 2025

A large RRSP is a sign of financial success, but without a large RRSP withdrawal strategy, it can create unexpected challenges. Many Canadians face higher taxes, clawbacks on government benefits, or estate complications simply because they don’t plan their withdrawals carefully.

In this post, we’ll show you how a large RRSP withdrawal strategy can help protect your wealth, minimize taxes, and maintain financial flexibility. Using real-life examples, you’ll see how careful planning today can save you headaches and keep more money in your pocket tomorrow.

How RRSPs Work: Contributions and Taxes

Take Jim’s situation in Manitoba as an example. While working, he earns $160,000 a year, placing him in the 43.4% marginal tax bracket.

If he contributes $10,000 to his RRSP:

His taxable income drops from $160,000 to $150,000
He saves approximately $4,300 in taxes

This demonstrates the first benefit of RRSPs: contributions lower taxable income during your earning years. In other words, RRSPs help reduce the amount of tax you pay while you are still working.

Retirement Withdrawals and Tax Risks: A Large RRSP Withdrawal Strategy in Action

At 60, Jim earns $60,000 per year. If he withdraws $10,000 from his RRSP, his taxable income rises to $70,000. This increase costs him about $3,300 in taxes. At first glance, RRSPs still look beneficial.

However, if Jim has $1.5 million in his RRSP and keeps taking only small withdrawals, the account will continue to grow. By 71, when he converts his RRSP into a RIF, mandated withdrawals could push him into a much higher tax bracket — possibly back to 43.4% in Manitoba.

In addition, these larger withdrawals could trigger an Old Age Security clawback, reducing or even eliminating government benefits. With a large RRSP withdrawal strategy, Jim can manage these tax risks and protect his retirement income over time.

Estate Considerations for Large RRSPs

RRSPs and RIFs are not always tax-efficient for estates. For instance, if Jim passes away without a spouse, his registered accounts could be taxed as income in the year of death. In this case, $1.5 million could result in taxes exceeding 50%.

However, careful planning today can reduce this risk. By strategically balancing withdrawals between RRSPs, TFSAs, and non-registered accounts, Jim can lower future tax liabilities and protect his estate.

Implementing a Large RRSP Withdrawal Strategy

Instead of letting your RRSP grow unchecked, take action early.

Start with larger withdrawals while you are in lower tax brackets. This reduces your RRSP balance before mandatory withdrawals begin.

Next, use your 60s to fund your TFSA or a non-registered account. Smaller RRSP balances lead to lower RIF withdrawals later.

Also, spread savings across RRSPs, TFSAs, and non-registered accounts. This gives you more control over taxes each year.

Finally, plan withdrawals around government benefits. This helps limit OAS clawbacks and protects your income.

A large RRSP withdrawal strategy lowers taxes, improves cash flow, and supports a better retirement lifestyle.

Real-Life Example: Sarah’s Situation

Sarah is 72, earning about $90,000 per year from CPP, OAS, and RIF withdrawals. She avoids going over the OAS clawback threshold of roughly $93,000, which limits her lifestyle.

With a large RRSP withdrawal strategy, Sarah could safely increase her withdrawals. This gives her more freedom to enjoy travel, family, and experiences. At the same time, she could still leave a sizable estate. The key is carefully balancing withdrawals with taxes and government benefits.

Final Thoughts

Stop letting generic retirement rules dictate your withdrawals. Map your income, spending goals, and account structure. This helps you create a large RRSP withdrawal strategy tailored to you.

The Atlas System shows how these strategies can work for your retirement plan. It walks clients through goals, income, investments, taxes, and estate planning. This ensures withdrawals are optimized and your retirement stays realistic.

Click here to book a free consultation with our team. Get personalized guidance for your retirement plan.

For practical tips, real-life examples, and strategies you can use today, visit the Trans Canada Wealth Management YouTube channel and subscribe for regular retirement insights.