If you're approaching retirement or already receiving Old Age Security (OAS), your net income directly affects how much OAS you keep. By strategically managing your RRSP, you can lower your net income and reduce or eliminate the OAS clawback. The key is understanding that RRSP contributions reduce your taxable income in the year you make them, while RRSP withdrawals increase it. This creates an opportunity: you can contribute to your own RRSP during higher-income years and withdraw during lower-income years in retirement to minimize OAS impact. OAS clawback occurs when your net income exceeds the annual threshold set by the CRA. For 2025, that threshold is approximately $90,997 (it changes yearly for inflation). For every dollar of net income above this threshold, you repay 15 cents in OAS benefits. Once your net income reaches roughly $147,000, you lose all OAS benefits. This makes income planning critical. Many Canadians don't realize their RRSP withdrawals will push them into clawback territory, essentially costing them more than the tax rate alone suggests. If you retire before age 65, consider living off non-registered savings, TFSAs, or CPP instead of RRSP withdrawals.
No. TFSA withdrawals do not count toward your net income, so they will not trigger OAS clawback. This makes TFSAs very valuable in retirement for providing tax-free income that protects your OAS benefits.
Yes, spousal RRSP contributions allow you to claim the deduction while your spouse receives the funds. When your spouse withdraws in retirement (ideally at a lower income), OAS clawback for the household is reduced. The CRA has attribution rules, so ensure your incomes are genuinely different.
The OAS clawback threshold for 2025 is approximately $90,997 (adjusted annually for inflation). Once your net income exceeds this, you repay 15 cents of OAS for every dollar over the threshold.
This depends on your situation. If you can cover living expenses without RRSP withdrawals before 65, delaying withdrawals keeps your net income lower and protects your future OAS. Once you're receiving OAS at 65, you're already in clawback territory, so withdrawal timing becomes less critical for OAS purposes.
RRIF withdrawals count as income and can trigger OAS clawback, just like RRSP withdrawals. However, RRIFs allow you to control withdrawal amounts (within CRA minimums), so you can strategically withdraw only what you need to stay below the clawback threshold.