How early RRSP withdrawals can help some retirees come out ahead

In the right circumstances, accelerating RRSP withdrawals can make you better off in the long run.File Photo

Registered Retirement Savings Plans are the primary retirement savings tool for Canadians and at this time of year, all the attention is on the accumulation stage. But how you eventually decumulate the assets in an RRSP also matters: too much tax deferral and saving too long can be bad things.

RRSP savers should strive to minimize lifetime tax and maximize retirement income over simply postponing RRSP withdrawals as long as possible. In the right circumstances, accelerating RRSP withdrawals can make you better off in the long run.

We will consider two scenarios where early RRSP withdrawals may make sense — one with a single person with a small RRSP and one with a couple with large RRSPs.

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