Even those who despise golf will likely have heard the saying, “driver for show, putter for dough.” The premise: smacking the ball 300 yards looks great, but it's the ability to get it in the hole that determines success. Retirement planning follows a similar pattern. Accumulating wealth and saving diligently gets you so far. But it’s your income and spending strategy that determines whether you can achieve the retirement lifestyle you want.
And just like putting, decumulation is often the most neglected discipline—yet it's where an advisor can make the biggest difference. So, what does your ideal retirement look like? Dream vacations, helping grandkids get on the property ladder, or buying a second home overseas? A smart income strategy can help make it happen.
Here are four critical areas to explore with your wealthadvisor in 2025:
1. CPP and When to Take It
Generally, the longer your life expectancy, the more reason there is to defer CPP past 65 (up to age 70). You can start as early as 60, but doing so reduces benefits by up to 36%. On the other hand, deferring to 70increases benefits by up to 42% (0.7% per month after age 65).
Taking CPP early may be wise if you need the income or if deferring would push you into a higher tax bracket or trigger OAS clawbacks.The break-even point, the age at which delaying catches up to early payments—should be considered, especially if you plan to invest early CPP payments. However, remember: the guaranteed increase from deferring is hard to beat in most investment portfolios.
2. Sharing the Wealth
Depending on the duration of your marriage, it’s possible to share a portion of your CPP benefits with your spouse, particularly useful if one of you is in a higher tax bracket.
Beyond CPP, pension income splitting allows Canadians 65 and older to allocate up to 50% of eligible pension income—like RRIFs and lifetime annuities, to a lower-income spouse. CPP, OAS, and foreign pensions are not eligible for splitting.
A spousal RRSP is another valuable tool. If you’re over 71and can no longer contribute to your own RRSP, you may still contribute to a spouse’s RRSP (if they’re under 71 and have contribution room).
You might also consider a family trust to move investment income to children or lower-income family members. It can help fund education, travel, or a home purchase—while reducing overall household tax.
3. Using Your RRIF Wisely
After the year you turn 71, your RRSP must be converted into a RRIF. You’re required to take minimum annual withdrawals, which are taxable. Fortunately, the funds inside your RRIF can continue to grow tax-deferred.
If you don’t need the income, you can reduce tax by basing withdrawals on the age of a younger spouse. Alternatively, consider moving excess withdrawals into a TFSA (if you have contribution room) or anon-registered account, where you can manage tax via capital gains and dividends.
In 2025, the TFSA contribution limit is $7,000, bringing the total cumulative limit to $102,000 (for those eligible since 2009). UnlikeRRIFs, TFSA withdrawals are tax-free, don’t affect income-tested benefits likeOAS, and have no age limit. If you're funding a renovation or vacation, withdrawing from your TFSA is often far more tax-efficient than pulling more from your RRIF.
4. Strategic Withdrawals
In retirement, you’ll likely have income from RRSPs/RRIFs,TFSAs, non-registered investments, and perhaps other sources—rental income, inheritances, business income. The challenge is knowing when to tap into each in the most tax-efficient order.
A common strategy is income layering, starting with the least flexible and least tax-efficient sources like RRIF minimums, employer pensions, CPP, and OAS. Then, you layer in TFSAs, personal savings, and non-registered investments as needed.
This approach helps control your taxable income and avoid unnecessary clawbacks. For example, the OAS recovery tax in 2025 starts at$90,997 of net income. Keeping income under this threshold can preserve your full OAS benefit.
Final Thoughts
Accumulation is for show, but decumulation is where the real planning pays off. It may not be as celebrated as saving, but how you structure your withdrawals can be the difference between a good retirement and a great one. Reach out to our team to help you navigate these decisions each year, adapting your plan as your needs and goals evolve.
