Retirement income planning in Mississauga
Retirement income planning is the order in which you draw things down, and what each choice leaves behind. RRSPs, TFSAs and pensions are taxed differently on the way out and treated differently by an estate, so the sequence matters as much as the total.
FirstNextThenLast
The order of drawdown, first to last
- First
What you actually have
Registered and non-registered accounts, workplace pensions, government benefits and their timing, in one place with the tax treatment of each shown next to it.
- Next
The order of drawdown
Which account funds which years. The difference between a considered sequence and a default one shows up in tax paid and in what reaches the estate.
- Then
What the estate is left holding
Registered accounts are taxed on the final return in most cases, and that is often the largest single bill an estate faces. Planning income and planning the estate are the same exercise.
- Last
Reviewed as the rules and your life change
Contribution room, benefit timing and personal circumstances all move. The plan is revisited rather than written once.
Who is working out their income
- People within ten years of stopping work
- Anyone holding both a pension and registered savings
- Couples whose retirement dates are years apart
- People who want to know what their children will actually inherit
About the order, and what the estate keeps
When should I start planning income?
Before the first withdrawal, because the sequence is the part that is hard to undo. Ten years out is comfortable; the year you retire is still worth doing.
What happens to my RRSP when I die?
In most cases the value is included on the final tax return, and for many estates it is the single largest bill. There are exceptions where a spouse is involved. It is one of the first things worth checking, because it changes what the rest of the plan has to cover.
Do you handle the investments themselves?
The work here is the planning: what you hold, in what order it is drawn, what it costs in tax and what reaches the estate. Where investment or legal work is needed, it is done alongside your existing advisers or with an introduction.
Ehsan Khandaker is a licensed financial and estate planner, CLU and CHS. He is not a lawyer and does not draft documents. This page is general information about Ontario rules, not guidance about your own situation, and a will is drawn up by a lawyer.
Bring your statements. The plan starts from what is actually there.