I am in my 91st year and for my age, in reasonably good health. I drew down a significant extra sum in 2025 from my RRIF. Fortunately, due to some good earlier decisions, my RRIF remains with a very strong market value. I use this drawdown for two purposes: to reinvest in my non-registered accounts, and also to pass money to my three adult children (tax free in their hands). My TFSA is maximized and my income is such that I no longer qualify for OAS.
Would you please comment on this strategy?
—Robert
Robert, first congratulations on both your longevity and the discipline that helped preserve your retirement assets. At 91 and in good health, your situation raises several common planning considerations that other retirees may also face: required RRIF withdrawals, the impact on Old Age Security (OAS), tax trade-offs between taking money now versus leaving it in registered accounts, and how to use extra cash—whether to reinvest, gift, or keep as a buffer for future care costs. Below I lay out the main points to help evaluate whether your approach makes sense.
Minimum RRIF withdrawals
Registered retirement income funds (RRIFs) require annual minimum withdrawals that increase with age. For example, if you converted an RRSP to a RRIF in your early 70s, by age 72 the legislated minimum would be a few percent of the prior year-end balance. By age 91, that minimum is significantly higher—nearly 12% of the account balance. Because the required percentage rises each year, many RRIF accounts decline in size late in life unless investment returns consistently outpace withdrawals.
Equities can deliver solid long-term returns, and an aggressive portfolio can sometimes preserve or grow RRIF values if markets cooperate. Still, most retirees hold a mix of assets and rarely capture the full market return every year. That makes it useful to consider whether taking more than the minimum withdrawal is appropriate based on personal goals, tax consequences and estate planning objectives.
OAS clawback
One crucial issue when increasing RRIF withdrawals is the Old Age Security (OAS) clawback. If your annual net income rises above a threshold, a portion of the OAS pension is recovered through the tax system, effectively adding an additional tax bite. For recent years, that recovery begins sometime in the five-figure range and the rate of recovery can materially raise your marginal effective tax rate.
Depending on your province of residence and total taxable income, the combined federal, provincial and clawback effects can push effective marginal tax rates well above typical bracket rates. You noted you no longer qualify for OAS, which suggests your income is substantially above the clawback threshold. That context matters: if taking additional RRIF income keeps you in a very high bracket or prevents OAS eligibility, the extra withdrawals could trigger significant immediate tax, but they may still make sense for lifetime tax efficiency in some cases.
A numerical example
To illustrate the trade-off, consider a simplified scenario. If your taxable income is about $150,000 a year and you withdraw an extra $50,000 from your RRIF, that extra amount will be fully taxable and could be taxed at around 40% depending on where you live. That leaves about $30,000 in hand after tax from the $50,000 withdrawal. Repeat that over five years and you would have taken $250,000 from the RRIF, leaving approximately $150,000 after tax in your pocket.
Contrast that with leaving the money inside the RRIF until death. If the estate eventually pays tax on the RRIF balance, there is a risk the ultimate tax bill could be higher—potentially over 50% in some provinces when combined with other taxes. In that case, withdrawing earlier and using or gifting the after-tax proceeds can be more tax-efficient for your heirs. This example simplifies by ignoring future investment growth and other variables, but it highlights why extra withdrawals can sometimes reduce lifetime tax.
What to do with extra withdrawals
Your plan to refill or maximize a tax-free savings account (TFSA) is sensible: TFSAs shelter future growth from tax and provide flexible access. If you are currently directing extra RRIF proceeds into non-registered investments, consider whether some of that money would be better given outright to your adult children or grandchildren, depending on your goals and family circumstances. Gifts to adult children are not taxable to the recipient in Canada, although specific rules may apply to U.S. citizens subject to U.S. gift tax rules.
Before making significant gifts, ensure you retain adequate resources for your own needs. Long-term care and unforeseen medical expenses can be costly, and you should maintain a comfortable buffer rather than over-gifting. If you plan to use gifts as part of an overall estate strategy, discuss the timing and amounts with your financial or tax advisor so you don’t unintentionally create shortfalls later.
Summary
In short, taking extra RRIF withdrawals can be a sensible strategy when it lowers lifetime tax for you and your estate, helps you fund meaningful gifts, or allows you to shift money into tax-free or more flexible accounts. The decision depends on current and expected future income, the size of the RRIF, your life expectancy, family considerations, and provincial tax rules. Given your situation—TFSA maximized, strong RRIF value, and an intention to provide for your children—your approach appears reasonable, provided you keep a financial cushion for future care costs and review the plan periodically.
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