How much should I take out of my RRSP?

How much should I take out of my RRSP?

Recently, I got this great reader question:

How much should I take out of my RRSP?

Of course, “it depends” is what I told them but with some further guidance, assumptions and insights like this below, well, I hope this post helped them out and I hope it helps you too!

How much should I take out of my RRSP?

Thanks to a recent reader question, I want to unpack this simple yet complicated question. 

First up, as long as your RRSP isn’t a locked-in plan (i.e., Locked-In Retirement Account (LIRA) which I also have), you should be able to get your money out of your RRSP at any time.

What is a LIRA and how should you invest in it?

However, RRSP withdrawals should proceed with caution. The amount you withdraw from your RRSP will be included as income for tax purposes – that’s just the way it goes when it comes to this tax-deferred account.

Beyond the reporting income for tax purposes, you’ll pay withholding tax on the amount you withdraw (based on the amount of the withdrawal).

And finally, with any RRSP withdrawal, you’ll also lose the contribution room you originally used to make your RRSP contribution. 

For these reasons and more, withdrawals from your RRSP before retirement don’t tend to make too much sense to me personally unless you really, really need the money.

Withdrawing RRSP money at retirement

Your Registered Retirement Savings Plan (RRSP) is hopefully just one key account in your retirement income puzzle. There are other income sources you should rely on as well/factor-in.

In no particular order of start dates or amounts but some guidance for you:

1. Government benefits (CPP and OAS) as a key source

Canada Pension Plan (CPP) is a contributory pension plan meaning you’ll get what you contribute into it – just like your defined contribution pension plan at work (if you’re lucky to have one). The more you contribute to CPP, the higher the benefit. CPP is indexed annually each January to inflation.

The amount of your CPP retirement pension depends on different factors, such as:

  • the age you decide to start your pension
  • how much and for how long you contributed to the CPP
  • your average earnings throughout your working life

For 2024, the maximum monthly amount you could receive if you start your pension at age 65 is $1,364.60. The average monthly amount paid for a new retirement pension (at age 65) in October 2023 was $758.32. Your situation will determine how much you’ll receive up to the maximum.

Old Age Security (OAS) is a non-contributory pension meaning you do not contribute to it – the benefit comes from general tax revenues based on residency. Someone who has lived in Canada for 40 years or more between age 18 and 65 will be entitled to the maximum OAS which is $714 currently.

Better than CPP in that this benefit is adjusted for inflation each quarter. 

But it’s not all the money, all the time. If your income is higher than $90,997 for 2024, your OAS will be subject to a pension recovery tax or what is commonly referred to as the “OAS clawback”.

In my recent Weekend Reading edition where I suggested you focus on your income goals, and not obsessing over benchmarking or indexing data, I shared a link from Rob Carrick from The Globe and Mail that highlighted just how many folks are impacted by this dreaded clawback in retirement. 

Not. Very. Much. 

For rich seniors, it’s an issue for sure but for 90%+ of the retirement population don’t worry about it. 

“The Old Age Security recovery tax, known widely as the OAS clawback, starts to kick in when a recipient makes more than $90,997 in 2024. A little more than 500,000 seniors were affected by the clawback, or 8.3 per cent of total OAS recipients,according to the most recent data from Statistics Canada.”

CPP can start as early as age 60 or as late as age 70.

OAS can start as early as age 65 or as late as age 70.

Generally speaking, if you don’t need the money from CPP or OAS defer those benefits.

You’ll simply get more money.

You can keep contributing to your RRSP until December 31 of year you turn 71. At the end of that year, you have three (3) key options to withdraw the money to use for your retirement, and the most popular one for many DIY investors is turning your RRSP into a RRIF.

Option 1 – Convert your RRSP to a RRIF

While you can convert your RRSP to a Registered Retirement Income Fund (RRIF) at any age, it might make sense at age 65 for pension income splitting, if that applies to your situation. Once a RRIF is set-up, you’ll pay no withholding tax on the minimum amount you receive from your RRIF. You will pay withholding tax on RRIF amounts you receive over the minimum though…

Option 2 – Purchase an annuity

You can convert your RRSP to an annuity which can provide you with guaranteed income for a specific period of time or the rest of your life. You may not pay withholding tax and the money you receive from the annuity is fully taxable in the year you receive it. But, basically, it’s creating your own pension plan. Note on withholding tax: Canadian withholding tax is mandatory for annuities purchased with RPP (locked-in and non-locked-in), LIF or DPSP premiums.

Option 3 – Lump sum withdrawal

You can withdraw some or all the money from your RRSP before age 71. You’ll pay withholding taxes and the full amount will be included in your income which could result in you paying a large amount of tax. Generally speaking, its best to avoid lump tax hits.

2. Workplace pensions as another key source

Employer pensions defined benefit (DB) or defined contribution (DC) can be another great income source.

As the names suggest:

  • With a DB pension – your pension income benefit is defined for you.
  • With a DC pension – your pension contribution is defined but the final value is not, subject to investing and market forces. 

Pension income is fully taxable too. 🙂

3. TFSAs and Non-Registered accounts as yet another key source

Tax free savings account (TFSA) withdrawals are always tax free and can be taken at any time.

Personally, I prefer to max out my/our TFSAs before any other investing.

I tend to own low-cost ETFs inside both TFSAs that have earned at least 6% or more on average although I own a few individual stocks that have done well there too!

Then and Now – XAW

Beyond TFSAs, non-registered investing can work for many but only after the TFSAs or RRSPs in your household are maxed out….

How much should I take out of my RRSP?

My reader asked:

How much should I take out of my RRSP?

Here were the assumptions I was working with from this dedicated reader:

  • Sally age 59, looking to retire later this year.
  • No debt; owns her home, owns her car. 
  • $100,000 in her TFSA.
  • No Non-Registered assets beyond savings accounts. Not included in drawdown plan. 🙂
  • No workplace pension. 
  • Assumed 75% max CPP at age 65, max OAS at age 65.
  • I will assume 3% spending inflation for Sally, 3% real estate inflation/price appreciation. 
  • No plans to work in retirement, although she could for a bit of hobby money. 🙂

Sally has done VERY well to save and invest $850,000 inside her RRSP to date over the last 35 years, and is now wondering, how much she should / could she spend from her RRSP??

  • Assuming 0% growth this year inside her accounts just to be safe, with 6% long-term equity returns like low-cost XAW should deliver inside her RRSP/RRIF and TFSA, Sally should be just fine to meet her desired spend of $4,000 per month moving forward (and higher) every, single, year.  


How much should I take out of my RRSP

Financial Assets:

How much should I take out of my RRSP - Financial Assets

Withdrawal table:

How much should I take out of my RRSP - Ledger

In fact, because Sally doesn’t take out more than she could from her RRSP/RRIF, in her 60s and 70s, then at age 90 the RRSP/RRIF remains a tax liability worth about $600k. 

Be mindful about that RRSP and RRIF tax liability!

Watch out for RRSP and RRIF taxation

How much should I take out of my RRSP?

All answers to any financial projections given everyone is different usually start with “it depends” but as you narrow and finalize your assumptions, things can become much more clear. 

In this short case study, Sally has not only saved enough to start retirement without any workplace pension, but she also could likely spend MORE from her RRSP/RRIF over time since at that desired withdrawal rate she will never liquidate that RRSP/RRIF account balance including barely touching her TFSA along the way.

Save, Invest, Prosper using low-cost financial projections!

I am happy to support any of your own financial projections reports with my time and work. 

Cashflows & Portfolios

In fact, at Cashflows & Portfolios there are now two (2) low-cost services to choose from:

  • Done-For-You – we do the work and data entry, and provide your reports like I just did a bit for Sally OR 
  • DIY – whereby you do all the work, you do your own data entries, and you get your own results in the software – we essentially open up some professional financial software for you to use to be your own retirement income planner!

As a My Own Advisor reader, you always get a discount off either service. Just mention my site. That’s it.  

I launched this service with my DIY investor good friend – a service founded by DIY investors for DIY investors without the conflict of any advice.

I hope you enjoyed this short case study and thanks for your readership.

As always, I welcome anyone to share their RRSP/RRIF withdrawal strategy on the site to pay it forward. There are a lot of best practices that retirees employ and I’m always curious what folks are doing and why, to meet their retirement income needs successfully.


My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

24 Responses to "How much should I take out of my RRSP?"

  1. Nice one Mark,

    Question time 🙂

    Old Age Security (OAS) is a non-contributory pension meaning you do not contribute to it – the benefit comes from general tax revenues based on residency. Someone who has lived in Canada for 40 years or more between age 18 and 65 will be entitled to the maximum OAS which is $714 currently.

    So…if an Immigrant who arrive at the age of 40 can’t claim anything from OAS until at the age of 80 and lived in Canada for 40yrs?

    1. I can take a crack at this one.

      An immigrant, or a natural born citizen of Canada for that matter, must have at least 10 years of residency in Canada (from age 18 and up) to become a recipient of OAS. Once at least 10 years of residency past 18 years old is reached then the pensioner will be eligible for 1/40th of OAS for each year of post-age 18 residency.

      For someone who spent their entire life in Canada they will receive 40/40ths (or the whole OAS benefit)

      If someone was born in Canada and lived here until they turned 28, but then returned at age 65 they would be eligible for 10/40ths or one quarter of the OAS benefit.

      If an immigrant came to Canada at age 25 and stayed here they would be eligible for 40/40ths (or the whole OAS benefit)

      If an immigrant came to Canada at age 43 and stayed here they would be eligible for 22/40ths of the OAS benefit.

      Things do get a bit murky if a recipient chooses to retire elsewhere – then the answer starts to depend on the social security agreements that are in place with various countries around the world.

      One thing I’m not sure of is if say, an immigrant came to Canada at age 30, but chose to defer OAS to age 70 – are they entitled to 35/40ths of an increased OAS, 40/40ths of a standard OAS, or 40/40ths of an increased OAS? – I’m not sure of the answer here – does deferring OAS allow one to add additional “top-up” years of residency and if so, are those years also subject to the monthly 0.6% increase???

    2. Great question and like James chimed in, very much prorated on residency.

      “To receive a partial Old Age Security pension, you must have lived in Canada for at least 10 years (after age 18). The amount of the partial Old Age Security pension you receive depends on the number of years you have lived in Canada.

      Your partial payment amount is based on the number of years in Canada divided by 40.

      You can delay your first payment up to 5 years to get a higher amount.” (i.e., to age 70 is a trick :).


  2. CJ (57, will retire at 59) · Edit


    Thanks for another great article.

    I have a LIRA and RSP – 4 stocks in the LIRA, 3 stocks in the RSP. Super concentrated I know but long term consistent and steadily increasing dividend payers.

    At age 60, the goal is to have 4 years worth of annual dividends that these accounts generate, built up on the cash/GIC side inside these accounts (I turned DRIP off on these accounts 2 years ago). At that time, I’ll convert these to RRIF’s (yes I lose flexibility by converting the RSP so soon, but I’m OK with that), and start making withdrawals. The withdrawal amounts will simply be the annual amount of dividends that these accounts generate, which will be greater than the prescribed minimums until I’m in my late 80’s. This strategy might not work for most, but for me it will cover 1/2 my living expenses (I do have other sources of income) and for me takes some of the emotion out of the equation.


    1. Nice to hear from you, CJ.

      Thanks for your comment…

      I hear ya on the dividends. 🙂

      I’ve turned off my DRIPs inside our RRSPs for some time now, letting cash build up more and/or building cash equivalents I could sell with ease inside the RRSP and not touch any capital. I’m pretty “there” for the first year of RRSP withdrawals, in cash/cash equivalents if needed to use without touching any stocks or ETFs.

      I would like to have another years’ worth of withdrawals ready to go for early 2025 to be honest.

      Each year, it is my hope dividends flow into the cash bucket, and I withdraw the cash for living expenses and I will keep the extra years’ worth of cash just in case as a buffer…

      So, I’m biased since I like the fact that “withdrawal amounts will simply be the annual amount of dividends that these accounts generate” but I probably won’t keep my RRSPs/RRIFs around until my 80s since I’ll have other income streams to rely on: DB pension + CPP + OAS + maxed out TFSAs. That should do, I hope??

      Happy to chat!

  3. Hi Mark, I was wondering in your scenario for Sally – would you suggest she convert her RRSP to a RRIF at the time she retires? Or leave the RRSP as is and pay whatever the fee will be for every RRSP withdrawal? And since there are withdrawal fees from RRSPs would you suggest that she take out say $ 20,000 all at once and take the tax hit ($ 6000) or take out $ 5,000 quarterly which would have less tax taken off ( $ 2000 total) but she would pay the withdrawal fee 4 times that year rather than just once? The withdrawal fees would be far far less than the difference in the taxes withheld so I presume the $ 5000 quarterly is the better option. I believe with the RRIF option there are no withdrawal fees and as long as you only take out the minimum amount you don’t have to have tax deducted although it is an option if you so desire. I am wrestling with this question right now and am leaning towards converting my RRSP to a RRIF when I retire at age 62. Thanks.

    1. Not advice, but I think for Sally, depending on her variable spending needs and given income splitting is not applicable, I think Sally should use this information to keep her RRSP intact for the first year, at least, get a feel for withdrawals without being locked-in to a RRIF schedule, and then decide from there.

      The withholding tax is just the start of any tax reconcilation since the government wants their money back (from the RRSP being tax-deferred for so long).

      There could be the odd RRSP withdrawal fee to pay, $25 or something depending on the institution and depending on her spending needs, quarterly could work x4 per year = $20,000 in your example but it really depends on budget planning and when folks need the money to be honest.

      The benefits for Sally out of the gate are typically no RRIF withholding taxes on mins. and no withdrawal fees either but you only get what you get from that schedule, otherwise, it’s a lump sum withdrawal.

      I think ultimately the spending goals and desires matter most since nobody is going to miss nor care about $25 here or there over a year but that’s just me too!?


      Happy to hear your thoughts back.

  4. Hi Mark, we’re updating our financial planning in June and I’m going to ask our planner to model inflation NOT solely as an annual %, instead as a low annual, plus a periodic jump. After last year, when prices of the things WE spend our money on jumped very significantly in one year, and WILL NOT ever decline hence, the mathematics of a low, annual inflationary factor simply don’t work over the long term. Unless we reduce our spending, the inflationary jump has the sustained effect of increasing spending substantially over our plan, and then sustaining that spending til we die. I.E. an inflationary jump basically tosses the spending plan out the window.
    For long term management, I want to see the effect of inflationary jumps so I can be sure we’re planning adequately.
    Note that our future is filled with anticipated inflationary jumps: oil shocks, wars, US civil strife, drought, contagions, etc.
    Can’t know timing, but modeling a few scenarios should help guide decisions.

    1. I think your planner should definitely factor in higher inflation, or at least ask the questions with you in June.

      I used 3% sustained in this example, which I think is very fair.

      If you can model inflation as waves, some higher periods, some lower, that’s great too.

      The other thing you should model is your desired spend vs. MAX, attainble spend. We do that for folks at Cashflows & Portfolios – so they understand the range of potential spending to throttle-up or down as needed including inflation impacts. That should be aligned to any oil shocks, terrible wars or related strifes.

      I use 3% sustained for my own projections.

      Thoughts back?

      1. I’m stuck on the idea that inflation compounds annually, and so do inflationary jumps.
        Our current model is likely identical to yours – an assumed base inflation rate. I’m planning to ask our planner to layer inflation rates: a base rate, then a jump in, say, 2028.
        Because most of our pension income is NOT indexed, I believe we have not adequately accounted for increasing resource scarcity and resulting price increases.
        We are fortunate that a substantial part of our retirement income is via investments, which over the long term appreciate faster than inflation. If that ceases to be true, then all bets are off!!

        1. Ya, that can work, Bill. I personally don’t mind some sustained inflation assumptions…I’m certainly not using Bank of Canada outdated targets of 2%. Useless. 🙂

          I think setting base inflation to 3% sustained for the coming decades is very wise and then if you have the opportunnity/software access to show “what happens” with a larger, shorter-term spike of 4-5%, all good.

          The reality is, if inflation is sustained higher than 4-5% on average, for decades on end, something drastic for all of us is underway and not sustainable for anything nor anyone.


  5. We converted our RRSP to RRIF as soon as we retired and take more money out then the minimum required by the RRIF withdraw factor. Plan to have all the accounts empty by age 75 but likely sooner. Since we have a DB pension the RRSP didn’t grow to be super large anyway due to the pension adjustment.

    1. That’s common with folks that have a great DB pension, get the RRSP (at some of it, more of it out) before DB + CPP + OAS are all flowing and even then, if you have non-regs. + TFSAs those are other future income streams too….lots of it perhaps.


  6. Our plan currently has us converting to RIF when I turn 60 and taking out 12-15% every year from 60-70 when, I expect our RIFs will be depleted. It’s based on only contributing my employer and matched dollars (and nothing for my wife) in the meantime, but this year we were able max my contribution and add some extra to her RSP. So, I expect in 4-5 years when we pull the trigger it will be a higher amount, but as JRR pointed out, there will be an eye to tax brackets as I intend to take out the minimums early in the year, and then the balance Dec 30/31. Our RSPs are far more modest than they should be due to several investing errors I made until I found Mark’s site (and the BTSX strategy).

    1. I enjoy the BTSX strategy for sure, even though I don’t sell the stocks every year like the strategy suggests. I tend to hold most of the top-10 year after year after year.

      James, not unlike what I see and hear others doing – start RRSP withdrawals early, like Sally, around age 60 if they can retire that young.

      Then, RRSP > RRIF around age 65 for more predictable income once CPP and OAS tend to come online.

      I appreciate your comment! Continued success on building your income stream!

  7. I am retired and I have been withdrawing from my RSP. My plan looks at the tax rate. I cap my withdrawals when they bump me into the next bracket. I also limit my lump sum withdrawals to $5K to keep holdback tax at 10%. I am trying to get the best tax rate advantage until I turn 71, then I have the dictated withdrawals. I redeploy the funds to open investments if I don’t need the cash.

    1. That seems to be a good strategy, to remain in the same tax band. I hope to redeploy some of our RRSP funds eventually but my near-term plan is to “live off dividends” from the RRSP in the first 5-years or so in semi-retirement and not touch any capital. I will however slowly sell equities, stocks, ETFs there over time as I age.

      What is your approach? Do you sell equities periodically or spend the dividends or a mix of both?

  8. Hi Mark;
    So many caveats in here.
    One of the big ones is that you do not get to decide the minimum amount you will withdraw from a RIF. The government does that for you as per this table
    I am very sure you are aware of that but just maybe some others think they can withdrawal lets say only 4% per year ROFL. That is only at age 65. Keeps going up after that. Now if your RIF is generating more than 10% when you are 88 you are an exceptional stock picker. Anyone who can beat a 20% withdrawal rate at 95 would be in all financial columns.

    As you mention, any funds withdrawn are subject to tax percentages based on your total revenue. So that $4K may or may not be “tax free” depending on your net income when you file your income taxes. When minimum rate amounts are withdrawn from a RIF or LIF you are not obliged to pay any tax on them. The minimal amounts can be withdrawn “TAX FREE”. You may however be subject to taxes when you do your income tax filing prior to the end of April. As an example, I have both a LIF and a RIF. I withdraw from the LIF the minimal amount without any taxes withheld. Then later in the year, usually OCT/NOV time frame I withdraw the minimal amount from the RIF. Now I could withdraw without paying any taxes. However I know that come April at filing time I would have one hell on a tax due amount and if I had not paid any tax prior to filing I would probably be subject to quarterly payments – which i want to avoid. So, based on the previous yearly filing as well as the current year’s projected revenue, I decide how much tax I want to pay. That’s right, I decide how much tax to pay. I tell the bank how much percentage to apply to Fed tax and how much to Prov tax (I live in QC). If my calculations are right i will have very little to pay come April 30th. Bit of a juggling act but not to hard.

    Now, lucky me, I have enough revenue that it trips the “clawback” on my OAS. Some see this as a great injustice. So do I by the way. However all is not lost! The clawback is not just money withheld but it is actually “taxed” back. So it contributes to taxes withheld at source when you file your taxes. So while you do not have the money in your pocket at least it contributes to paying a bit less come April 30th.

    There is discussion on whether to put money in to a RRSP or a TFSA. IMO when you are starting out you sock away as much as you can. Obviously the TFSA should be maxed out every year if possible but when you are young the RRSP should be maxed out as well if you can financially afford it. As your work life progresses you can adjust the RRSP contributions according to your work environment (security and salary). Even then if your employer is contributing a percentage to your RRSP based on your contributions then you go for it. Nothing like “free” money.

    Live long and prosper


    1. Great stuff, Ricardo….and yes, noted about RRIF min. withdrawals are established for you.

      This is why it’s an important decision when to start your RRSP > RRIF.

      I think RRSPs > RRIFs make great sense, for sure, at age 65 for income splitting but I’m not sure it’s required prior, unless of course, you enjoy predictable income. re: schedule.

      Correct on tax reconciliation in April – gotta file. 🙂

      This is why I see of and hear of many retirees taking whatever they need “out” of the RRSP in the fall each year, so they can be strategic come tax-time (i.e., have the $$) and/or invest inside their TFSA come every January.

      I’m with you on the TFSA…max it out, and where I am coming from is usually higher-income earners can max out their RRSP as well or at least put a dent into it.

      Thanks for the great comment,


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