Q&A: Drawing Retirement Money

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Which money should come out first – registered or non-registered accounts?

Q – Is there a rule of thumb on what savings to draw from first after retiring for maximum tax efficiency? I’m looking to retire in my mid-50s and will have significant savings in the follow areas: cash on hand/emergency fund, individual dividend paying stocks, self-directed RRSP mutual funds, defined contribution company pension consisting of mutual funds, and TFSA. My ideal goal is to only live on investment gains, and eventually CPP and OAS, while preserving the capital. My wife will continue to work for a few more years until she hits her magic number for her defined benefits pension.

– Jason L.


A – As a general rule, it is best to leave the money in the registered plans until the non-registered accounts are exhausted. There are two reasons for this. First, it keeps your RRSP and TFSA money tax-sheltered for a longer time. Second, it defers taxes on RRSP withdrawals, perhaps until such time as your marginal tax rate is lower.

– G.P.

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