How to plan a tax-efficient retirement withdrawal strategy


The move into retirement can be a challenging one for many Canadian retirees. You suddenly have to change your mindset from making money and saving it, to drawing from your savings to provide income.

Many retirees have several sources of income in retirement, but often don’t realize that the sequence of withdrawals — which sources you withdraw from first — can have major tax implications.

It’s important to be aware of your potential tax rate in retirement in Canada. One of the key retirement withdrawal strategies is to maintain a consistent income level, in the lowest tax bracket possible. This involves juggling your income from taxable and non-taxable sources so as to avoid going from one extreme to the other (where you might pay zero tax one year and a high rate of tax in another).

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