Will your RRIF cost you your OAS? We modelled three retirees

The OAS clawback is the most-feared number in Canadian retirement, and for most people it is a phantom. We modelled three retirees with different registered balances, held their spending constant, and ran them to 95 to find out when forced RRIF withdrawals actually start costing OAS. The short answer: below roughly $1 million in registered assets, they barely ever do. Above about $1.5 million, they cost a lot — and a targeted pre-71 meltdown leaves about $117,000 more in the estate.

The setup

Single retiree in Ontario. Average CPP ($925.35/month) and full OAS ($751.97/month) starting at 65. Registered assets grow at 5%. The RRSP converts to a RRIF in the year they turn 71, so the first forced minimum lands at 72. Withdrawals cover spending, or the minimum if it's larger; anything forced out above what the retiree spends is reinvested — TFSA room first, then non-registered. The 2026 clawback threshold is $95,323, and OAS is reduced by 15 cents per dollar of net income above it.

We compared two strategies, both available in the withdrawal sequencer: Standard (withdraw only what spending requires, then only the forced minimums), versus Targeted meltdown (deliberately withdraw up to the clawback line between 65 and 70, then revert to minimums). These are the tool's actual outputs, so you can reproduce every number below.

The results

Three findings worth sitting with.

Below $1 million, stop worrying — and don't melt down either. The $600,000 retiree never comes close: their income peaks at $70,657 at age 94, still $24,000 under the line. Every hour spent engineering around the OAS clawback at this balance is an hour wasted. More surprising: the meltdown is actively counterproductive here. It saves about $34,000 of lifetime tax, but prepaying tax on money that could have kept compounding pre-tax inside the RRIF costs more than it saves — the estate ends up about $51,000 smaller. Tax deferral is worth more than bracket-smoothing at this balance. This describes the large majority of Canadian retirees.

At $1 million, the clawback arrives — late, and small. This retiree stays under the line until age 86, when climbing RRIF percentages finally push forced income across it; they surrender $9,358 over the last decade of the plan. The meltdown eliminates that entirely and cuts lifetime tax by about $54,000, at a cost of roughly $13,000 in final estate value. Whether that trade appeals depends on whether you value tax paid while alive differently from estate at death — this is the balance where the strategy stops being academic and becomes a genuine judgment call.

At $1.6 million, the clawback is not a risk, it's a certainty. Forced income crosses the line at 72 — the first year minimums apply — and never comes back under it, surrendering $175,248 of OAS across the projection. Here the meltdown finally earns its reputation: it cuts the clawback to $139,501, saves about $55,000 of lifetime tax, and leaves about $117,000 more in the estate. When the alternative is forced withdrawals taxed at your marginal rate plus 15% clawback for twenty-plus years, prepaying tax in the cheap 65–70 window wins decisively.

The pattern underneath

The clawback isn't a RRIF problem. It's a big-RRIF-and-modest-spending problem.

If you spend everything your RRIF throws off, the minimum isn't forcing anything on you — you'd be withdrawing that much anyway. The damage happens specifically when the government makes you withdraw more than you need, taxes it as ordinary income, and then claws back OAS on top. You end up with money you didn't want, in the most heavily taxed form available, having lost a benefit you were entitled to.

That's why the fix is timing, not avoidance — but only when the numbers are big enough. You can't dodge the tax on an RRSP; that money was always going to be taxed. What you can do is choose the years in which it's taxed. The window between 65 and 71, when employment income has stopped and RRIF minimums haven't started, is the cheapest tax real estate most Canadians will ever own. Filling it deliberately — and moving the proceeds into a TFSA, where they compound tax-free and never count as income again — is what the $117,000 in the table above actually is. Below the clawback zone, though, the same move just trades cheap deferral for early tax, and loses.

The caveats, stated plainly

This is a model, not a prophecy. It assumes a steady 5% return (real portfolios don't do that), a single retiree (couples can split pension income, which changes everything), average CPP, full OAS with 40 years of residency, and 2026 tax rules held constant for thirty years. Change any of those and the numbers move. The shape of the finding — that the clawback bites hard above roughly $1.3–1.5 million and barely at all below $1 million — is robust. The precise dollars are not.

The point of a model isn't to tell you your number. It's to tell you which question is worth your attention. If you have $600,000 registered, the answer is: not this one. Go look at when to take CPP instead, where the stakes for you are far higher.

Run your own numbers in the withdrawal sequencer, which does this with your actual balances, province, and spending — and shows the derivation rather than just the answer. (To reproduce this article exactly: Ontario, ages 65/65/95, the balances and spending above, inflation 0%, return 5%, CPP $925.35.)

Not financial advice. Modelled on 2026 CRA and Service Canada figures. Your results depend on returns, longevity, province, and tax rules that will change.