Planning Retirement Income: RRIF, CPP and the OAS Clawback

The order of withdrawals and the effect of the OAS clawback threshold

Scott Tang, CPAUpdated 2026-11-052026 rules4 min read

In retirement, your income comes from several places: RRSPs and RRIFs, CPP, OAS, employer pensions, TFSAs and non-registered investments. When each one starts and how much you take from it affect one another: withdrawing too much from a RRIF can trigger the OAS clawback, and taking CPP early or late makes a big difference to the amount. With good planning, the same money can mean considerably less tax over your lifetime.

Age 71

By the end of that year, your RRSP must be converted to a RRIF (or used to buy an annuity); the November 5, 2026 budget plans to merge the RRSP and RRIF into an "RRSP for life" (consultation until January 8, 2027), and the current rules stay in place for now

Ages 60–70

You can choose when to start CPP; the later you start, the more you get each month

Ages 65–70

OAS can be deferred; each month of deferral adds 0.6%

$95,323

If your 2026 net income is above this, OAS is clawed back at 15% (recovered from payments in a later period)

When to start

Item	CPP	OAS
Earliest	Age 60	Age 65
Latest	Age 70	Age 70
Starting early	0.6% less for each month before 65 (36% less at 60)	Not possible
Deferring	0.7% more for each month after 65 (42% more at 70)	0.6% more for each month deferred (36% more at 70)
Living abroad	Generally payable	You usually need 20 years of residence in Canada after age 18 to keep receiving it abroad; social security agreements and other conditions may change the result

The OAS clawback: the "hidden tax" that is most often overlooked

Net income at or below the threshold

2026 net income ≤ $95,323

Full OAS

The threshold is indexed to inflation each year

Net income above the threshold

15% of the amount above the threshold

Deducted from your OAS

At a high enough income, all of your OAS is clawed back

RRIF withdrawals, the gross-up on eligible dividends and capital gains all push up net income

TFSA withdrawals are not income, so they don't affect OAS. This is one of the reasons TFSAs are so useful in retirement planning.

Some common approaches

1
RRSP first, 60–65
Before CPP and OAS start, your income is low, so draw down part of the RRSP first, according to a plan
2
Defer CPP and OAS
If you are in good health and have other money to live on, deferring can secure a higher amount for life
3
Split pension after 65
Up to half of RRIF income can be allocated to your spouse
4
TFSA fills gaps
When you need extra money, take it from your TFSA; it doesn't push up your income
5
RRIF at 71
Withdraw at the minimum rate; if your spouse is younger, you can choose when setting up the RRIF to base it on your spouse's age

Points to watch

RRIFs have a minimum withdrawal each year
Starting the year after you convert to a RRIF, you must withdraw a minimum percentage each year (about 5.28% at age 71), and the percentage rises with age.
You can use your spouse's age
If your spouse is younger than you, you can choose when setting up the RRIF to base the minimum withdrawal on your spouse's age, so you withdraw less; you can't switch from year to year.
The RRIF on death
If it doesn't pass to a spouse or to a qualifying financially dependent child or grandchild, the whole balance is generally included in income on the final return; beneficiary designations and any deferral need to be confirmed separately.
Retiring back in China
After you leave Canada, different rules apply to receiving OAS and CPP and to the tax withheld from them; see "After You Leave: What Happens to the Canada Child Benefit, CPP and OAS?" in the Changing Tax Residency series.

How Sheng Qian CPA can help

A retirement income schedule
Based on your and your spouse's ages, accounts and needs, we map out where to draw from and how much, year by year.
Watching the OAS clawback
We work out whether your net income each year will go over the threshold, and adjust withdrawals and splitting.
Adjusted at tax time each year
Pension income splitting, RRIF withdrawals, and settling any over- or under-withholding; for prices, see "What Sheng Qian CPA Can Do for Investors: Tax Returns, Accounts and Annual Planning" in this series.

Sources

Service Canada: CPP retirement pension – when to start · OAS – how much you could receive
CRA: OAS pension recovery tax · RRIF minimum amounts

Disclaimer

This article is general information only and is not tax, investment or retirement planning advice. Everyone's situation is different; please consult a CPA and your financial adviser about your specific arrangements. Service fees are as set out in our written quote.