For the 2026 tax year, you can contribute up to 18% of your previous year's earned income, to a maximum of $32,490. However, if you have unused contribution room from previous years, you can carry it forward indefinitely.

When you contribute to an RRSP, you receive a tax deduction that reduces your taxable income for that year. The value of this deduction depends on your marginal tax rate:

By December 31st of the year you turn 71, you must convert your RRSP to a Registered Retirement Income Fund (RRIF), an annuity, or withdraw the full amount (not recommended due to massive tax implications).

Once converted to a RRIF, you must withdraw a minimum amount each year based on your age. These withdrawals are taxed as income.

The 2026 annual TFSA contribution limit is $7,000. However, if you were 18 or older in 2009 and have been a Canadian resident since then, your cumulative contribution room could be as high as $102,000.

The TFSA's greatest advantage for retirees is that withdrawals do not count as income for tax purposes. This means:

• TFSA withdrawals won't increase your marginal tax rate
• They won't trigger OAS clawback (which starts at $90,997 net income in 2026)
• They won't reduce your GIS benefits if you qualify
• You can withdraw and re-contribute the following year without losing room

• Your current marginal tax rate is higher than you expect in retirement
• You're still in your peak earning years (50-60)
• Your employer offers RRSP matching contributions
• You have significant contribution room and can reduce taxes meaningfully
• You're confident you can draw down the RRSP before age 71

• Your current marginal tax rate is similar to or lower than expected retirement rate
• You're already retired or in a low-income year
• You want to preserve OAS benefits (avoid clawback)
• You may need flexible access to funds
• You've already maximized employer RRSP matching

Traditional advice suggests drawing from non-registered accounts first, then RRSPs, and leaving TFSAs for last. This allows tax-sheltered accounts maximum time to grow.

However, a more nuanced approach often works better:

1. Early retirement (60-71): Consider RRSP withdrawals to "smooth" income and avoid large mandatory RRIF withdrawals later.
2. Use TFSA strategically: Withdraw to top up income without affecting taxes or OAS eligibility.
3. Non-registered for flexibility: Use for irregular expenses while managing capital gains timing.

If you're 65 or older, up to 50% of eligible pension income (including RRIF withdrawals) can be split with your spouse. This can significantly reduce your household tax burden if one spouse has higher income than the other.

The first $2,000 of eligible pension income qualifies for a federal tax credit of about $300 (plus provincial amounts). If you're 65+ and don't have pension income, consider converting enough RRSP to RRIF to generate $2,000 in RRIF income to claim this credit.

The federal age amount for 2026 is $8,790, but it's reduced when net income exceeds $44,325 and eliminated entirely at $92,480. Strategic withdrawal planning can help preserve this credit.