Your Retirement Drawdown Plan, Year by Year

Nathalie retires at 60 with $690,000 spread across three accounts: $480,000 in her RRSP, $90,000 in her TFSA and $120,000 in a non-registered account. She spends $48,000 a year after tax, and her QPP and her OAS start at 65.

For her first five years of retirement, she does not pay a single dollar of tax. From 66 on, she pays about $8,500 every year, in today's dollars, for eighteen years in a row.

Is that good news or a missed opportunity? It depends on how she decides her withdrawals, and there are several ways to go about it, some with more foresight than others.

From a rule to a drawdown table, and from the table to a plan

Think of a trip across terrain you don't know. There are four ways to make it, and each one sees a little further than the last.

Blind. You take what you need from whichever account is closest to hand, and you find out about the tax in April. It's travelling without a map: you're moving, but you can't tell whether you're heading uphill.

With a rule. You follow a strategy with a name. It might be the traditional order, which empties the non-registered account first, then the RRSP, and leaves the TFSA for last. Other rules leave the RRSP for last, fill your income up to a certain bracket, or take out a fixed percentage every year. A rule is a signpost on the road, and it's already much better than nothing. In the traditional order for withdrawing from your RRSP, TFSA and non-registered account we explain why it is rarely the best.

With a table. One row per year, and three things in each row: where your income comes from, what your taxable income adds up to and what the next dollar costs you. That is the map: for the first time you see where your cheap years are and where the expensive ones are. With that table you can already try an RRSP meltdown before 71: you locate those years and decide to fill them. That is what a drawdown table is.

With a plan. The map shows the terrain, but it doesn't know that every decision changes it. If you take more out of your RRSP this year, your balance drops, and so do your minimum withdrawals in the years ahead. If your income rises this year, your OAS clawback is deducted starting in July of the following year. A plan weighs how each withdrawal affects this year and the ones to come. That is a true drawdown plan: the GPS that knows every turn affects the rest of the route, and recalculates it when something changes.

The gap between a rule and a plan is not small. In our research, deciding each year how much to take out of the RRSP achieved almost everything the household could gain by the end. Setting two amounts, one before the QPP and one after, didn't get past three-quarters, even with the best possible amounts.

The real cost of a dollar does not rise in a straight line

To plot any route you need to know what each dollar costs you, and here is the catch. The tax bracket table climbs in an orderly way. What you actually pay does not.

The difference comes from the OAS clawback. Above $95,323 of net income in 2026, each extra dollar takes 15 cents off your pension. Your tax return doesn't call it a tax, but it works like one: every dollar of OAS you hand back is money you lose for having earned more. Because what you hand back is deducted from your income, in practice it costs you a little less than those 15 cents.

We calculated the rates in this article with the 2026 tax tables and the calculator on our RRIF minimum withdrawal page. The table below is for a single 68-year-old in Quebec, with income from the QPP and a pension:

At $140,000 of income, the next dollar costs more than at $160,000. In total, someone earning $160,000 still pays more tax. But they have already handed back all their OAS, so their next dollar only carries income tax. Someone earning $140,000 still has OAS to lose, and each extra dollar costs them both.

On the map, that band is a hill: you climb as you cross the threshold and come back down once your OAS has reached zero. For 2026 income, OAS reaches zero at $155,320 between ages 65 and 74, and at $161,320 from 75. These are estimates until September and final figures from October. In the OAS clawback threshold we explain why they move.

Your own spot on that map depends on your pensions. In a couple, each of you has your own, because tax and the OAS clawback are calculated per person. In the calculator you enter your QPP and your employer pension, say whether you receive OAS, and see what the last dollar you withdraw costs you.

You can't avoid the tax: you choose which years to pay it in.

The stages of your table

The price of a dollar depends not only on how much you earn, but on where you are in your retirement. A plan in Quebec goes through up to four stages, and the first one exists only if you retire before 65.

Before the QPP and OAS

If you retire before 65, a valley opens up between your last paycheque and your public pensions. Your taxable income can fall almost to zero, and with it the cost of each dollar you withdraw from your RRSP.

With the 2026 tables, a single 62-year-old with no other income can withdraw their first $17,000 from the RRSP while paying almost no tax. Up to about $50,000, each additional dollar costs them 25.7%. It is a valley that closes when your pensions arrive.

At 65: the public pensions arrive

When the QPP and OAS begin, your income rises without you withdrawing anything. If you keep the same withdrawal amount as before, your income jumps that year.

That is why it pays to think in terms of a target income rather than a fixed amount. You decide how far you want to fill your taxable income, and the withdrawal adjusts on its own when a new pension arrives. Its most visible advantage is that it avoids that jump.

From 65 you can also split your RRIF withdrawals with your spouse, something we look at in pension income splitting and what it's really worth.

The RRSP at 71

Your RRSP has to be closed by December 31 of the year you turn 71. According to the options the CRA describes, you can convert it into a RRIF, use it to buy a life annuity, or withdraw it all at once. If you withdraw it, the whole amount is added to your income for that year.

If you choose the RRIF, starting the following year there is a mandatory minimum withdrawal that grows with age. From there on, the road has a mandatory climb, and part of your table is no longer your decision.

After 75

OAS rises by 10% from age 75: from $751.97 to $827.17 a month, according to the July to September 2026 amounts. A bigger pension takes longer to claw back in full, so the hill stretches further, to $161,320 for 2026.

If your income sits around that zone, the same table that worked for you at 70 no longer describes the terrain at 76.

Nathalie, year by year

Back to Nathalie. We simulated her situation in AuraPlan with stated assumptions: a 4% return after retirement, 2% inflation, a life expectancy of 90 and the 2026 tax tables. With no strategy switched on, she follows a simple rule: the non-registered account first, then the TFSA, and the RRSP as late as possible.

Here is her table, grouped by stage and in today's dollars:

For five years, Nathalie walks along the valley floor with her RRSP untouched. Her taxable income is practically nil, and the band where each dollar cost 25.7% or less goes unused.

Then she climbs onto a plateau and stays there for eighteen years. From 66 to 83, each extra dollar she withdraws costs her 32.4%, year after year, because all of her income now depends on the RRSP and the public pensions.

Her rule worked as a rule: she was never short of an instruction. She couldn't see that every dollar she left in the RRSP at 62 would come out later, at 32.4% instead of 25.7% or less. That is the pattern our research measures: a rigid plan leaves the cheap years before the public pensions empty, and concentrates withdrawals in the expensive years.

Nathalie's table can't tell you how much she would have gained by filling those valleys. That figure depends on assumptions nobody knows in advance, starting with how much her money earns, and the next section explains why.

A valley you don't use isn't saved for later.

Why nobody can give you the order in advance

If the cheap years are so clear, why isn't there a rule that always makes use of them? Because the route changes from one household to the next.

When we compared withdrawal orders across different households, the order that won for one household lost for another. The traditional order isn't always wrong. It is unreliable, which is different: it hits or misses depending on your accounts, your pensions and your spending.

There is also a subtler reason. Taking money out of the RRSP early to use a valley means that money stops growing sheltered from tax. If it grows quite a bit faster inside the RRSP than outside, paying a little more tax later can end up leaving you with more. What decides it is the gap between the two returns, not the bracket.

That is why a plan is recalculated every year, like a GPS when you go off course: with your real balances, the new tax tables and whatever changed in your life. A spreadsheet can show you the table. The hard part is that every row moves the others.

At AuraPlan we do that recalculation year by year for your household, with your accounts and your pensions, weighing how each withdrawal affects the years that follow.

What Nathalie was missing was a plan: seeing the terrain before travelling it, while she could still choose which way to go.

That plan doesn't promise you a flat road. It lets you walk through your retirement calmly, knowing in advance what each step is going to cost you.