In planning with clients the impact of tax on income is always part of my discussions. It is not how much you earn but how much you keep that counts and tax always takes a bite out of our earnings.
There are many ways we work with our clients to plan their income in retirement some of which include:
1 – Income splitting – RSP income cannot be income split until age 65 so carefully withdrawing from each registered plan before then.
2 – Considering carefully when to begin CPP and OAS – both taxable.
3 – Minding the basic personal exemption – ($11,138 for 2014) the income everyone can earn tax free. We ensure this is the minimum amount everyone earns and even withdrawn from an RSP and re-invested if not needed
4 – Using non-registered and TFSA funds for living expenses first to defer tax on RIF income as long as possible.
5 – Considering non-taxable Return of Capital withdrawals on non-registered funds used for living expenses.
This article goes into more detail on some of the above topics.