Why the order matters at all
By retirement most Canadians hold money in up to three kinds of accounts, and the tax office treats each one differently. Every dollar out of an RRSP or RRIF is added to your income and taxed at your full rate. Every dollar out of a TFSA is tax free and does not even appear on your tax return. Non-registered investments sit in between: you already paid tax on the money going in, so only the growth is taxed, and capital gains are taxed on just half.
Spend $60,000 a year from different mixes of those three and you can end up with very different tax bills for the exact same lifestyle. The order also changes which years your taxable income is high, and that decides whether income-tested benefits like OAS and GIS get trimmed. That is the whole game: same spending, different sequence, different amount kept.
Three orders Canadians commonly compare
Most withdrawal plans are a version of one of these three. None is right for everyone; each buys something and costs something.
| Order | The idea | The trade-off |
|---|---|---|
| Registered first | Drain RRSP and RRIF money early, often in the low-income years before 65, so the account is smaller when forced minimums begin at 71. | You pay tax sooner than required, and the withdrawn money stops growing tax deferred. |
| TFSA last | Spend taxable money through the 60s and 70s and keep the TFSA growing untouched as a tax-free reserve for late-life costs like care. | Taxable income stays high for years, which can feed the OAS clawback the whole time. |
| Bracket-smart blend | Each year, take registered money up to a chosen income line, then top up spending from the TFSA so you never cross it. | It needs a little arithmetic every year, and the right line moves as pensions and minimums start. |
After 71, the RRIF minimum narrows your choices
Whatever order you prefer, the government sets a floor once your RRSP becomes a RRIF. Starting the year you turn 72 you must withdraw a minimum percentage of the account every year, based on your age at the start of the year: 5.28% at 71, rising to 5.82% at 75, 6.82% at 80 and 8.51% at 85. A $500,000 RRIF at 71 forces about $26,400 of taxable income that year, roughly $2,200 a month, whether you need the money or not.
That forced income is the reason the ordering question is easier to shape in your 60s than in your 80s. The size of the RRIF you arrive at 71 with is a choice you make earlier; the minimums after that are not.
The OAS clawback and GIS change the math
Two income-tested benefits sit quietly behind every withdrawal decision. The OAS clawback takes 15 cents of every dollar of individual net income above $95,323 in 2026. RRIF withdrawals count toward that test in full; TFSA withdrawals do not count at all. For someone near the threshold, the choice of which account a dollar of spending comes from is also a choice about keeping or losing 15 cents of OAS.
At the other end of the income range, GIS matters more. The Guaranteed Income Supplement pays up to $1,105.43 a month to a single person with little income (early 2026 rate), and it is reduced by roughly 50 cents for every dollar of income other than OAS. For a lower-income retiree, a RRIF dollar can effectively lose 50 cents of GIS on top of any tax, while a TFSA dollar loses nothing. This is why the same ordering question can have opposite answers at different income levels.
Couples have more moving parts
A couple is really running two tax returns, and both the clawback and the tax brackets are tested person by person. That creates room a single person does not have: withdrawals can be planned so each spouse fills the lower brackets instead of one spouse stacking income into the higher ones, and up to 50% of eligible pension income, including RRIF income from age 65, can be shifted to the other spouse's return at tax time.
It also adds a question single retirees never face: whose accounts to draw first. Spending from the older spouse's registered money first, for example, can soften the forced minimums that arrive with their earlier RRIF conversion. The combinations multiply quickly, which is why couples tend to benefit most from actually projecting a few orders rather than reasoning it out in their heads.
A worked example
Louise spends $60,000 a year. In order one, everything beyond her CPP and OAS comes from her RRIF. All of it is taxable, and her net income lands about $10,000 over the $95,323 threshold, so she repays 15% of $10,000, roughly $1,500 of OAS, on top of full income tax on every RRIF dollar. In order two, she takes her required RRIF minimum plus only enough extra to stay under the threshold, then covers the rest of the $60,000 from her TFSA. Same spending, but her taxable income is lower, her tax bill is smaller and she keeps the full OAS. The cost of order two is quieter: the TFSA she may have wanted for later is shrinking sooner.
Calculated with the same 2026 CRA rules the TruePath engine applies.
How TruePath shows this
TruePath projects your accounts year by year to age 95, applying the RRIF minimums, each spouse's tax brackets, the OAS clawback test and GIS where it applies. You can compare withdrawal orders side by side and see what each one does to lifetime tax, the OAS you keep and the balances left in each account along the way. The forced minimums and the income tests are already in the math, so the comparison reflects the rules rather than a rule of thumb.
Related questions people ask
Is there a standard best order to withdraw from retirement accounts?
No. Registered-first, TFSA-last and blended approaches each win in different situations, depending on your tax bracket now versus later, how close your income sits to the $95,323 OAS clawback threshold and whether GIS is in the picture. The order is a comparison to run, not a rule to follow.
Do TFSA withdrawals count as income in retirement?
No. TFSA withdrawals are not taxable, do not appear on your tax return and have no effect on the OAS clawback or GIS. The withdrawn room is added back the following January 1.
Can I skip a RRIF minimum withdrawal in a year I do not need the money?
No. The minimum must come out every year once the RRIF is in place and it is fully taxable. If you do not need it to live on, you can reinvest it in a TFSA or non-registered account, but the tax on it is unavoidable.
Does the withdrawal order matter if my income is low?
Yes, sometimes more. GIS is reduced by roughly 50 cents for every dollar of income other than OAS, so for a lower-income retiree a RRIF withdrawal can cost 50 cents of GIS per dollar while a TFSA withdrawal costs nothing. The stakes per dollar can be higher than for the clawback.
Where do non-registered investments fit in the order?
In between. The original money comes out tax free since it was taxed before it went in, and only the growth is taxed, with capital gains counted at half. Many orders spend non-registered money alongside or just after registered money, but its best place depends on how much unrealized gain it carries.
Sources
This page is general education about Canadian retirement rules, not personalised financial advice. Figures are for the 2026 tax year and change with government updates.