Withdraw everything from RRSP?

Question: I am 63 years old, retired, and have $21,000 in my RRSP! Should I leave it there or take it out and pay off my bills? – B.D.


That depends on your circumstances. The amount of money you mention will not generate much in the way of retirement income for you. So it’s worth considering withdrawing it if you have significant bills that are resulting in high interest payments, such as credit card debt. If you can pay off those debts, then your monthly cash outlay will be reduced.

However, you need to look at the tax consequences of withdrawing all the money at the same time. It will be considered as income in the year received, and taxed at your marginal rate. If you have very little other income, then it might be worthwhile to take it all at once. Otherwise, you may want to spread the withdrawals over a couple of years if that would reduce the tax bite. – G.P.