Retirees often juggle income from RRIFs, TFSAs, and non-registered accounts. Understanding how to strategically withdraw from these accounts can reduce taxes and maximize retirement income.
Overview of Accounts
- RRIFs require mandatory withdrawals, taxed as regular income. Drawing more than the minimum in lower-income years can prevent higher taxes later.
- TFSAs allow tax-free withdrawals, making them ideal for supplementing income without impacting your tax bracket or government benefits.
- Non-registered accounts are taxable, so careful timing of withdrawals can help minimize the tax impact, especially on interest and capital gains.
Key Strategies
- For RRIFs, early withdrawals before OAS and CPP can reduce overall taxes and avoid the OAS clawback.
- For TFSAs, use them when taxable income from other sources is high to keep taxes low. Reinvesting RRIF withdrawals into a TFSA is also a smart move.
- Non-registered accounts can be managed by selling investments strategically to spread out capital gains over lower-income years.
Conclusion
Balancing withdrawals from these accounts can help retirees optimize income while minimizing taxes. A personalized approach based on individual needs ensures a financially secure retirement.
