Saving for retirement is one challenge. Turning those savings into a reliable, tax-efficient retirement income in Canada is another.
This guide explains the basics of building a retirement paycheque and how Mode Money Managers™ helps retirees keep more of what they’ve worked for.
1. List your retirement income sources
Common sources include:
- Government benefits: CPP and OAS
- Employer pensions
- RRSPs and RRIFs
- TFSAs
- Non-registered investments
- Rental properties or business income
Mode Money Managers™ helps you see all sources on one page before designing a withdrawal strategy.
2. Understand the tax treatment
Different accounts are taxed differently:
- RRSP/RRIF withdrawals are fully taxable as income
- TFSA withdrawals are tax-free
- Non-registered investments may be taxed as interest, dividends, or capital gains
- CPP and OAS are taxable and can trigger clawbacks at higher incomes
A tax-efficient retirement income plan coordinates these so you don’t pay more tax than necessary.
3. Decide when to start CPP and OAS
Starting CPP and OAS earlier increases immediate income but reduces monthly benefits. Delaying them increases monthly amounts but requires other income sources in the meantime.
Mode Money Managers™ can model different start ages and show how they affect your lifetime income and risk.
4. Choose a withdrawal order
Many retirees ask whether they should take money from RRIFs, TFSAs, or non-registered accounts first. The optimal order depends on your tax bracket, other income, and estate goals.
A common strategy is to:
- Draw from non-registered and modest RRSP/RRIF withdrawals early
- Use TFSAs strategically throughout retirement
- Manage RRIF withdrawals to reduce forced large withdrawals later
5. Plan for longevity and inflation
A retirement income plan must last potentially 25-30 years or more and keep pace with rising costs. Mode Money Managers™ helps structure your investments so you have both stability for near-term income and growth for later years.
6. Coordinate with your spouse or partner
Spousal income splitting, pension splitting, and survivor benefits all affect how much tax you pay and how secure the plan is. A coordinated approach reduces risk for the surviving spouse.
Mode Money Managers™ builds a tax-efficient retirement income map so you know where each dollar will come from and how long it can last.
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