In this episode of AskTMFG, John Iaconetti and Carlo Cansino tackle a question they hear constantly: should you draw from your RRSPs early to delay starting CPP?
They walk through the false beliefs that trip people up, like assuming CPP is always best taken early or that avoiding tax now is automatically the smarter move, and how those beliefs can lead to higher tax brackets, OAS clawback, and smaller lifetime CPP benefits.
Using a client case, Gary and Susan, both 63 with $500,000 in RRSPs, they show how drawing RRSPs first to defer CPP to 70 works for cash flow but forces more aggressive withdrawals, since deferring costs them roughly $150,000 in extra premature RRSP withdrawals combined over seven years. Because they also want to leave an estate to their adult children, and CPP offers no benefit beyond a surviving spouse, the better fit is often the reverse: take CPP earlier, let the RRSP keep growing, and pass it on through beneficiary designations, with strategic melt-down into TFSAs later to soften the estate tax hit.
The takeaway: there's no one-size-fits-all answer; it depends on income, retirement age, other assets, life expectancy, and estate goals.
👉 Watch the full episode here: https://youtu.be/jubodV1vIuA
Question for our listeners: If leaving an estate to your kids matters to you, would that change whether you take CPP early or defer it?
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