Retirement planning in your 60s: from saving to drawing an income

The switch from saving to spending

For decades, a plan is mostly about contributions. In your 60s it turns around: the question becomes how to turn a set of accounts and benefits into a steady, tax-aware income that lasts. Several decisions arrive close together, and some are hard to reverse.

It helps to treat this as a sequence rather than a single moment. A few years before the last paycheque, you can gather statements, estimate spending and test options. The key ages, from 60 for CPP to 71 for the RRSP conversion deadline, arrive in quick succession.

Gathering the pieces

Before the decisions, it helps to have the facts in one place: your CPP estimate from My Service Canada Account, your OAS letter or residence history, any workplace pension statement, and the current balance and room for each account. Add an estimate of first-year spending, and the plan has a starting point.

Spending in the first years of retirement can run higher, with travel and projects, and may ease later. A plan that allows for a higher first decade can be compared with one that assumes level spending throughout, to see how much the difference matters.

Meet Linda: a plan two years from retirement

Suppose Linda, 62, lives in Toronto and plans to retire at 64. She has $420,000 in an RRSP, $95,000 in a TFSA and $30,000 in a non-registered account, and will add $12,000 to her RRSP and $7,000 to her TFSA in each of her last two working years. Her CPP estimate is $1,150 a month at 65, and she expects full OAS.

The illustration assumes 5% returns before retirement, 4.5% after and 2% inflation, with all amounts in today's dollars. On those inputs, her savings total about $616,771 when she retires. Spending $50,000 a year after tax, her savings last until about 87, after which CPP and OAS alone would cover about $22,278 a year.

The calculator puts the highest steady after-tax spending her plan supports to 95 at about $44,900 a year with CPP at 65. With CPP delayed to 70, that figure rises to about $46,100, because a larger share of her lifetime income comes from an indexed pension that doesn't depend on market returns.

None of these figures is a forecast. They show how the pieces interact: how much the spending level matters, and how a choice about CPP shifts the balance between market-dependent savings and income that lasts for life.

CPP and OAS timing

CPP is reduced by 0.6% for each month it starts before 65 and increased by 0.7% for each month after 65, up to 70. OAS starts at 65 and can be deferred up to 60 months, rising 0.6% for each month deferred (36% at 70). The 2026 maximum CPP at 65 is $1,507.65 a month; OAS for October to December 2026 is up to $762.50 a month at 65 to 74.

For someone with $60,000 of other income, the calculator shows OAS of $762.50 a month starting at 65 or about $1,037 a month starting at 70. Counting payments to age 90 without discounting, that's about $242,475 starting at 65 versus about $267,546 starting at 70, with no recovery tax at that income.

Our CPP guide and OAS guide explain each choice, and the CPP start-age tool lets you test your own estimate. Quebec residents receive the QPP from Retraite Québec instead of CPP; the amounts are similar but not identical.

Which account first?

The order of withdrawals affects how much tax is paid over a lifetime. Drawing RRSP money in lower-income years can smooth taxable income, while keeping TFSA money for later preserves tax-free flexibility. Drawing the TFSA first can leave a large RRSP that is taxed heavily through RRIF minimums later on.

For Linda's plan, the calculator compared four approaches. Estimated lifetime tax was about $153,615 for non-registered first, about $150,240 for RRSP first, about $171,535 for TFSA first, and about $150,116 for filling a tax bracket from the RRSP each year. Savings ran out at 87 in all four, because spending, not order, sets how long the money lasts.

The withdrawal order tool shows how these approaches work with your own accounts.

Keeping an eye on the OAS recovery tax

OAS is reduced by 15% of net world income above a threshold, which is $95,323 for 2026. For 2026, OAS is estimated to be fully recovered at about $155,320 of income for ages 65 to 74. Large one-time RRSP withdrawals, capital gains or a combination of pension income can push income above the threshold in a single year.

Linda's planned income stays well below that line, but for households with larger RRSPs, spreading withdrawals over more years is one way people try to manage it. The OAS clawback tool shows the effect at different income levels.

Working, splitting and other details

If you work while receiving CPP, the contributions you make before 70 build a post-retirement benefit, up to $54.69 a month in 2026. Between 65 and 70 you may be able to stop contributing; confirm the rules with Service Canada. Couples can split up to 50% of eligible pension income on their tax returns, with RRIF income qualifying from 65; the couples page explains more.

RRSPs must be converted to a RRIF, an annuity or cash by December 31 of the year you turn 71. Some people convert earlier to start a steady income or for tax reasons; confirm how the timing affects your return with the CRA. The RRSP to RRIF guide walks through the steps.

Revisiting the plan each year

Retirement decisions in your 60s come in a sequence, and each one changes the next. After CPP starts, the withdrawal plan may shift; after a RRIF is opened, minimums set a floor on taxable income. Reviewing the plan each year, with updated balances and the current year's benefit amounts, keeps those pieces aligned.

When the RRIF years arrive, the in retirement page covers minimum withdrawals, tax on retirement income and estate basics.