2024 is nearly behind us, and with it goes another valuable opportunity to make smart, tax-efficient retirement decisions.
Every year, you get a chance to reduce your tax bill, not just today but for the rest of your life. Ignore it, and you could lose thousands to taxes that could have been avoided.
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What Is the RRSP Tax Bomb?
The RRSP tax bomb is one of the most expensive and overlooked risks in retirement planning.
Here’s what happens: if you pass away with a large RRSP or RRIF balance and no spouse to roll it over to, the entire balance is treated as income in your final year.
That pushes your taxable income into the highest bracket, meaning up to half your retirement savings could vanish to taxes.
In Ontario, that’s nearly 50 percent gone.
A Simple Way to Avoid It
The best way to defuse this tax bomb is surprisingly simple.
Start drawing money out of your RRSP while you’re still in a lower tax bracket. Even small, consistent withdrawals done strategically each year can dramatically lower your lifetime tax bill.
More importantly, it means leaving more behind for your family, not the government.
Why Timing Matters
Think of your retirement like a flight path.
A small error early on might not seem like a big deal. But over time, it can send you far off course, leading to missed opportunities, avoidable taxes, or income problems later in life.
The earlier you course-correct, the better your long-term results.
Waiting too long limits your options.
Final Thoughts
As the year winds down, this is your chance to review your income, plan ahead, and make sure your retirement strategy is on track.
If you do your own planning, give yourself enough time to get it right. If you’re working with an advisor, ask if they’re helping you manage this. If not, it may be time to find someone who will.
Book a free consultation with our team.
Watch the full video breakdown here.
