Planning in retirement: keeping income steady year after year

Planning doesn't stop at retirement

In the first years of retirement, many people find spending is higher than expected, with travel, home projects and helping family. Later, spending often shifts toward health and home support. A plan that is reviewed each year can adjust to those phases instead of being locked to a forecast made years earlier.

The core pieces are usually the same: public pensions, any workplace pension, a RRIF and a TFSA, and perhaps non-registered savings or a home. What changes is how they fit together as rules tied to age come into play.

Meet Robert: a year of RRIF income

Suppose Robert, 72, lives in Saskatoon. He converted his RRSP to a RRIF and has $380,000 in it on January 1. He receives CPP of $1,000 a month and full OAS, and keeps a TFSA for irregular expenses.

At 72, the RRIF minimum factor is 5.40%, so his minimum for the year is $20,520. The table below shows how the minimum and balance might change to 95 if the RRIF earned 4.5% a year, an illustrative rate rather than a forecast. The minimum rises gradually, from about $21,276 at 75 to about $22,582 at 80 and about $25,099 at 90, while the balance at the end of 95 is about $97,589.

The minimum is a floor, not a ceiling. Robert can take more in any year, but every dollar withdrawn from a RRIF is taxable income. The RRIF minimum calculator runs the same schedule for any balance and age.

For planning, it can help to treat the minimum as the base of the year's income and decide separately how any extra spending will be funded. That keeps the RRIF schedule, the tax estimate and the TFSA working from the same picture.

Tax on a retirement income

Robert's taxable income for the year is his CPP ($12,000), OAS ($9,150 at $762.50 a month) and RRIF minimum ($20,520), or $41,670 in total. The calculator estimates 2026 federal and Saskatchewan tax of about $5,766, an average rate of 14% and a marginal rate of about 25%.

Because little or no tax is withheld from some of these payments, retirees often receive instalment reminders from the CRA. Asking for extra tax to be withheld from RRIF payments is one way some people avoid a large bill in April; the CRA explains the instalment rules.

The retirement tax calculator shows the same estimate for other provinces and income levels. Our estimates don't include Quebec provincial income tax, and Quebec residents receive the QPP from Retraite Québec instead of CPP.

Benefits that change with age

OAS rises at 75: for October to December 2026, the maximum is $762.50 a month at 65 to 74 and $838.75 a month from 75, 10% higher. OAS is adjusted quarterly for inflation. The recovery tax still applies: 15% of net income above $95,323 in 2026.

For lower-income seniors, the Guaranteed Income Supplement (GIS) can add up to $1,138.90 a month for a single person with income under $23,112 (October to December 2026). Robert's income is above that limit, but GIS is worth checking each year for anyone whose income drops. Our GIS guide explains how it is assessed.

If a spouse or partner dies, CPP survivor benefits and a one-time death benefit of up to $2,500 may be available. The 2026 maximum survivor's pension is $904.59 a month for survivors 65 and older; confirm eligibility with Service Canada.

RRIF choices: spouse's age and extra withdrawals

When a RRIF is set up, you can elect to base the minimum on a younger spouse's or common-law partner's age. If Robert had a spouse five years younger, the calculator shows his first-year minimum would fall from $20,520 to about $16,522, because the factor for a 67-year-old is lower.

Some retirees take more than the minimum in lower-income years to smooth taxable income over time, while others take only the minimum to keep income low. Withdrawals beyond spending needs can go into a TFSA if there's room, since TFSA growth and withdrawals are tax-free. Our TFSA in retirement guide covers that approach.

Travel, part-time work and big expenses

Retirement plans change. Some people return to part-time work, which adds taxable income and, before 70, CPP contributions. Others spend part of the year outside Canada, which can affect provincial health coverage and, for long stays, residency for tax and benefits. Each is worth checking with the province, the CRA and Service Canada before committing.

Larger one-time costs, such as a new roof, a vehicle or help at home, are easier to absorb when they are expected. Drawing them from a TFSA keeps taxable income steady, while drawing them from a RRIF adds to the year's income and, at higher levels, to the OAS recovery tax.

Keeping your affairs organized

Estate planning is easier to do in steady times. A current will, powers of attorney for property and personal care, and up-to-date beneficiary or successor-holder designations on RRIFs and TFSAs can save family members time and uncertainty. Rules differ by province, so a local lawyer or notary can confirm what applies.

A one-page list of accounts, pensions, insurance and contacts kept in a safe place can help too. The estate planning basics guide covers the common pieces, and the downsizing guide looks at decisions about the home.

An annual check-up

Each year, it helps to look at the January 1 RRIF balance, the new minimum, expected income and tax, and any changes in spending or health. Indexation means CPP and OAS amounts change too, so an annual update keeps the plan in today's dollars.

The retirement planner can model the years ahead, and the key figures page lists current official amounts with their dates.

It's also a natural time to confirm that your contact details, direct deposit information and beneficiary designations are current with Service Canada, the CRA and each financial institution.