Retirement Withdrawal Order: how it works in 2026, with a worked example

Questions people ask

Should I withdraw from my RRIF or my TFSA first?

For most people with a large RRIF, drawing it down first in low-income years (or filling the lowest bracket every year) saves tax and shrinks the RRIF before minimums and the estate tax bill get large. TFSA-first preserves tax-free growth but leaves a bigger taxable RRIF for later. The simulation shows the actual difference for your numbers.

What is the RRIF minimum withdrawal?

A percentage of the balance at the start of each year, set by the CRA: 5.28% at 71, rising to 6.82% at 80, 11.92% at 90 and 20% from 95. Under 71 it is 1 ÷ (90 − age). There is no minimum in the year the RRIF is opened, and you can use a younger spouse's age to lower it.

How is a RRIF taxed at death?

Unless it passes to a spouse or a dependent child, the entire balance is added to your income in the year of death and taxed at once, often at the top rate. That is the main reason to draw a large RRIF down over your lifetime rather than leave it.

Do RRIF withdrawals reduce my OAS?

Yes. They are taxable income and count toward the OAS recovery tax threshold ($95,323 for 2026). TFSA withdrawals do not count. The simulation tracks the clawback under each strategy.

What does 'blended' mean?

Each year, withdraw from the RRIF just enough to use up the lowest federal tax bracket (up to $58,523 of taxable income in 2026), then take the rest of your spending from the TFSA. It converts RRIF money to spendable cash at the lowest possible rate every year.

Is tax withheld on RRIF withdrawals?

On amounts above the minimum: 10% up to $5,000, 20% to $15,000, 30% above (5%, 10%, 15% federal plus 14% Quebec). Withholding is a prepayment; the final tax is settled on your return, which is what the simulation calculates.

What is an RRSP meltdown?

Deliberately withdrawing more than you need from your RRSP or RRIF in the years before CPP and OAS start, when your income is lowest, so the money is taxed at a low rate now instead of a high rate later. It shrinks the forced minimums and the OAS clawback, and the surplus can be moved into a TFSA. The meltdown strategy in the comparison draws the RRIF up to the top of the second federal bracket ($117,045 in 2026) in those years, then switches to the blended order.

Why not always spend the TFSA first?

Because the RRIF keeps growing and the minimums at 72 and beyond can push you into higher brackets and the OAS clawback, and whatever is left is taxed in full at death. Spending the TFSA first is best mainly when your other income is already high.

How are non-registered investments taxed when I sell them?

Only the gain is taxed, at half your rate, so a withdrawal from an account with a high cost base costs very little tax. The calculator tracks your cost base and taxes only the gain portion of each withdrawal, and adds the tax on unrealized gains to the estate calculation.

Does the answer depend on how long I live?

Sometimes. The sensitivity line runs the comparison to 85, 90 and 95. If the same order wins at all three, you can act on it with confidence; if not, choose the one that is best across the ages you consider likely.