At 65, a retired Quebec executive with $1.2M in RRSP, $200K in TFSA, and $600K non-registered has three taps to open — in a specific order. Most retirees, and many planners, follow instinct: keep the TFSA for last, drain non-registered first, touch the RRSP only when forced at 71.
That's almost always wrong. Here's why: the RRSP keeps growing tax-sheltered, but at 71 the forced RRIF conversion imposes a rising minimum withdrawal that can push past the OAS clawback or into a higher bracket. Better to decumulate the RRSP slowly between 60 and 71, staying in moderate brackets.
Typical optimal sequence: start by drawing RRSP enough to fill the bracket to 30-32% combined, top up income needs from non-registered (where capital gains are 50% inclusion), and preserve the TFSA for years when an unexpected need pushes income — or for the estate.
Over 25 years, the difference between 'right' and 'wrong' sequence for this profile is $150K to $250K of tax. It's probably the most rewarding decision we make with a client in retirement planning.