For years, many Canadians have been told the same thing when it comes to retirement planning:

• Max out your RRSP.
• Get the deduction.
• Feel good knowing you did the right thing.

And for many people, contributing to an RRSP during their highest earning years really was the right move.

But as retirement approaches, many people start asking a different question:
If I did everything right with my RRSP, why doesn't retirement feel right?

When I meet with clients, that question comes up more often than you might expect.

And it almost always shows up with a sense of unease.

It’s not that RRSPs are bad, but few were taught how those decisions play out later, when income replaces paycheques and withdrawals begin.

Why RRSP Decisions Feel More Stressful Near Retirement

The February Panic Question:

Every year around RRSP season, I hear the same question.

“Do I need to buy some RRSPs?”

That question reveals how much they fear the topic.

They’re not sure about:

• Timing
• Uncertainty
• The right way of doing things.

Because when the topic of planning comes up people just want to do the right thing.

What often gets overlooked is a more important question:

Do you need the deduction this year, at this income level, given what your retirement income will actually look like?

Because every person has a different situation and it’s not so black and white.

An RRSP contribution is essentially a tax deferral strategy.

That works best when the deduction offsets income taxed at a higher rate than what you’ll face when the money eventually comes out.

When those rates are closer together, or reversed, that’s when people start feeling like something is off, even if they followed all the rules.

Why Many Canadians Learn About RRSPs Too Late

Because RRSPs are tax deferred, that matters more the closer you get to retirement.

At age 71, you can no longer contribute since it’s the year the account must be converted to a RRIF, an annuity, or withdrawn and taxed.

Many people assume withdrawals will naturally be taxed at a lower rate.

Sometimes they are.
Sometimes they are not.

It depends on what else is coming in.

• Pensions.
• CPP and OAS.
• Rental income.
• Part time work.
• Later on, required RRIF minimums.

This is where retirement specialists tend to focus, because this is where income streams begin stacking in ways people did not anticipate when they were simply saving.

Without coordination, all of those sources can quietly push income higher than expected, costing you more in taxes or potentially resulting in having some income-tested benefits clawed back.

There’s often a moment when someone realizes they did everything to save.

But very little planning went into how the money would eventually be used. This is where the difference between saving for retirement and planning retirement income becomes clear. 

That’s when I’ve seen the tears come.

A Common RRSP Retirement Scenario We See Often

Imagine a couple (this is a fictional composite of course)

Each spouse has about $400,000 in RRSPs.

They saved consistently and did what they were told.

But because RRSPs were always the focus, TFSA contributions were small or delayed.

When retirement arrives, the assumption is simple.

This is our retirement money, so this is where we will draw from.

The challenge is how that income is taxed:

every dollar withdrawn is fully taxable.

It stacks on top of pensions, CPP, and OAS.

Over time, I often see situations like this become more expensive than people expected, not because they made poor choices, but because the withdrawal side was never discussed.

One possible approach might be to draw more intentionally from RRSPs earlier, while tax brackets are lower, and use part of that money to build TFSA room.

That creates a pool of tax free money later, when flexibility matters more.

I like to drill it into people that without a long term view, they default to the most expensive path without realizing there were other options.

Too late.

Common RRSP Assumptions That Deserve a Second Look

One of the most common beliefs I hear is this.

“I’ll be in a lower tax bracket in retirement.”

That can be true.

It can also be very wrong, depending on the mix of income later on.

When pensions, CPP, OAS, and RRIF withdrawals all arrive together, the expected drop in tax rate does not always materialize.

Another assumption shows up when people continue contributing during lower income years.

If income is modest, or irregular, an RRSP contribution may not provide much immediate benefit.

Yes, deductions can be carried forward.

But that turns the decision into a planning choice, not an automatic one.

Many people never revisit that choice.

They keep contributing simply because that is what they have always done.

When RRSPs Can Work Against You

Over time, large RRIF balances can push income high enough to create surprises.

• Less flexibility.
• Higher tax rates.
• Triggered clawbacks.

At death, RRSPs and RRIFs are fully taxable on the final return unless they transfer to a spouse.

This is often when people say they did everything they were told, but never realized how the pieces would interact later on.

The Better Question to Ask About RRSPs and Retirement Income

The goal was never to avoid tax entirely.

The goal is to pay the least amount of tax over your lifetime, while keeping options open.

That requires coordination, timing and flexibility.

• RRSPs are one tool.
• TFSAs are another.
• So are pensions, CPP, and OAS.

What matters most is how these pieces work together over time, not just what feels urgent in February.

If your retirement plan is simply to draw money as needed, you are not alone.

But that is often where costs quietly add up.

RRSPs can be a powerful part of a retirement plan.

The difference is knowing when to use them, when to pause, and how they fit into the income you will rely on later.

That long view is what I focus on every day.

Contact us if you have questions about building a retirement income strategy  – both before and after retirement.