So You’re About to Retire: The First-Year Financial Timeline (With Real Numbers)

You’ve handed in your notice and circled your retirement date on the calendar.

Congratulations!

Now what?

The three months or so before retirement and the first six to nine months after are packed with decisions: pension paperwork, government benefit start dates, converting accounts, setting withdrawals, and making sure taxes are handled properly so your new paycheque lines up with your lifestyle.

This guide lays out the puzzle pieces: what to do before you retire, what happens in the first year, and how three different retirement scenarios look in practice.

Step 1: Your Spending Drives Everything

Start with your lifestyle. How much does it cost to live your life?

Most of my retired clients want to maintain the same standard of living that they enjoyed in their final working years, if not enhance it with additional money for travel, hobbies, and financial aid for their children and grandchildren.

Suppose you need $78,000 per year after tax. That number becomes your net income target. From there, you work backward to decide how much gross income to withdraw, what to withhold for taxes, and which accounts to tap.

If you are single and all of your income is fully taxable (RRIF, LIF, DB pension, CPP, OAS), $90,000 of gross income only nets about $71,000 in Ontario or Alberta.

To reliably spend $78,000 after-taxes, a single will need closer to $100,000 gross unless they use TFSA or other non-taxable sources.

Couples can get to $78,000 in after-tax spending much easier, by withdrawing just $45,000 each from fully taxable sources.

Check out Canadian personal tax rates by province here.

3 to 6 Months Before Retirement: Lay Out the Puzzle Pieces 

Employer pensions

If you have a defined contribution pension (DCPP), your balance moves into a Locked-In Retirement Account (LIRA) when you retire. You can leave the funds where they are (ex. Sun Life, Manulife, Canada Life, etc.) or open a LIRA at a bank or online brokerage platform.

A LIRA works like an RRSP for investing, but you cannot withdraw from it directly. When you want income, you must convert it to a Life Income Fund (LIF). The LIF works like a RRIF with a required minimum withdrawal each year and often a maximum withdrawal set by pension rules.

You may have the opportunity to unlock all or a portion of your LIRA upon conversion to a LIF and move the unlocked funds into your more flexible RRSP or RRIF. More on that later.

The flow could look something like this:

DCPP->LIRA->Unlock 50% to RRSP->Remaining 50% to LIF

If you have a defined benefit pension (DB), you will be asked to choose a start date, a guarantee period such as 5 or 10 years, and a survivor benefit such as 60 percent or 100 percent. These choices are permanent.

RRSP to RRIF 

You must convert an RRSP by December 31 of the year you turn 71. Many people convert earlier to set up predictable withdrawals.

For my clients, I suggest setting up the RRIF no later than their age 64 year so that withdrawals in their age 65 year (and beyond) are eligible for pension income splitting.

There are advantages for converting earlier, such as no pesky “partial deregistration fees” and no mandatory withholding tax on the minimum withdrawal.

Don’t fully convert the RRSP to a RRIF if you think there’s even a remote chance you might go back to work, even part-time. You don’t want the tax blow of minimum mandatory withdrawals on top of your employment income. In this case, straight RRSP withdrawals are fine, as is a partial RRIF where you move a smaller amount of your RRSP to a RRIF for withdrawal purposes.

When you convert, you can base the minimum withdrawal on your age or your spouse’s younger age, if applicable, which permanently lowers the minimum required withdrawal each year.

Government benefits

CPP does not start automatically. You have to apply, either online or by paper, and you choose a start date between ages 60 and 70.

The best practice for most people is to delay CPP to 70 if you can because the benefit grows significantly and acts like longevity insurance.

OAS usually starts automatically at 65, but you can delay to 70 for a larger benefit. You need to notify Service Canada if you plan to defer.

Both CPP and OAS are indexed to inflation. CPP payments get adjusted in January based on the previous year’s (Nov to Oct) CPI.

OAS payments are reviewed and adjusted quarterly by dividing the current 3-month average CPI by the previous 3-month average CPI.

Withdrawal cadence

Decide how you will pay yourself. Some retirees prefer monthly withdrawals to mimic a paycheque.

Others draw quarterly or even annually and then move money into savings to cover monthly expenses.

There is no single right answer as long as you have cash flow to meet your spending needs and the timing of expenses (which admittedly don’t always align with flat monthly withdrawals).

The First 6 to 9 Months After Retirement: Test and Adjust 

Confirm deposits and dates from your DB pension, CPP, OAS, and RRIF or LIF.

Understand how taxes are handled.

• RRSP withdrawals – Tax is withheld at 10% (up to $5,000), 20% ($5,001–$15,000), or 30% (over $15,000). These withdrawals are reported on a T4RSP slip and included on line 12900 of your return.
• RRIF / LIF withdrawals – Reported on a T4RIF slip and included on line 11500. The minimum required withdrawal has no tax withheld. Any amount above the minimum is subject to withholding at the same 10/20/30% rates as RRSP withdrawals.
• Defined benefit pensions – Reported on a T4A slip and included on line 11500.
• CPP – Reported on a T4A(P) slip, line 11400.
• OAS – Reported on a T4A(OAS) slip, line 11300.

One nuance to mention is that withholding tax is just a prepayment, not the final tax bill. At tax filing time, the actual amount owed depends on your total income and marginal tax rate.

You can usually request that more tax be withheld. The goal is to get through your first tax season without a surprise bill. After you file, compare what was withheld with what you actually owed and make adjustments for year two.

Deep Dive: DCPP to LIRA to LIF and Unlocking

Here is the sequence if you have a company DCPP at a place like Sun Life.

1. Your DCPP stops when you retire (no longer a member of the plan).
2. You can open a self-directed LIRA at your brokerage.
3. You transfer your DCPP balance into the LIRA, which keeps the money tax-deferred.
4. When you need income, you convert the LIRA to a LIF. The LIF has a CRA minimum withdrawal and usually a jurisdiction-set maximum.

The jurisdiction matters. Unlocking rules are set by the pension regulator where your plan was registered, not where you live now.

Unlocking summary:

Jurisdiction	Age	Unlocking Rules	Notes
Ontario	55+	One-time unlock of up to 50 percent when converting to a Schedule 1.1 LIF	Must act within 60 days
Alberta	50+	One-time unlock of up to 50 percent when converting to a LIF	Partner consent often required
Federal (PBSA)	55+	Up to 50 percent when opening a Restricted LIF	Must transfer within 60 days
Manitoba	55+	One-time 50 percent unlock; remainder can move to a Prescribed RRIF with no maximums	Greater flexibility
Saskatchewan	55+	Transfer to a Prescribed RRIF with no maximum withdrawals	Full flexibility
Québec	55+	No maximum withdrawals from a LIF since 2025	Effectively full flexibility
BC	55+	No 50 percent unlock; only hardship or small-balance unlocking	Restrictive

Three Retirement Scenarios 

Scenario 1: The RRSP Couple (Ages 62 and 60)

Profile: A couple retiring without DB pensions. The 62-year-old has a larger RRSP than the 60-year-old. They want to spend $78,000 after tax.

Plan: The 62-year-old converts part of their RRSP to a RRIF for withdrawals. They withdraw about $100,000 gross per year to net their target.

Both spouses delay CPP and OAS until 70 for larger lifetime benefits. They withdraw from non-registered savings and/or investments to smooth cash flow. TFSAs can either continue to be funded or simply parked as a tax-free source of funds to be tapped last (if needed), once non-registered funds are exhausted.

Pension splitting will further reduce their tax bill once they are both 65.

Income Source (combined)	Ages 62 to 69	Ages 70+
RRIF withdrawals	~$90,000	~$36,000
CPP (both at 70)	–	~$34,000
OAS (both at 70)	–	~$20,000
Non-reg top-ups	as needed	as needed

The RRSP/RRIF withdrawals and the non-registered withdrawals can be used as a bit of a balancing act to reach your target income. For instance, those with healthy non-registered balances might withdraw equal amounts from their RRIFs and non-registered funds to smooth out tax rates.

This obviously depends on the size of your RRSP/RRIF and availability of non-registered funds.

Scenario 2: The Classic DB Couple (Both Age 65)

Profile: Married couple, both 65, each with a DB pension. They want $100,000 to spend, after tax.

Plan: They each receive about $30,000 from DB pensions. They delay CPP and OAS until 70 for maximum benefit. Their DB income covers most spending. RRSP withdrawals are aggressive from 65-70, but minimal once CPP/OAS kick-in. Pension splitting keeps their tax bill low.

Income Source (combined)	Ages 65 to 69	Ages 70+
DB pensions	$60,000	$60,000
CPP (both at 70)	–	~$34,000
OAS (both at 70)	–	~$20,000
RRSP/RRIF top-ups	~$60,000	~$3,000

Scenario 3: The Single Retiree (Age 65, No Pension)

Profile: A single retiree with no DB pension. She wants to spend $60,000 after tax.

Plan: She relies heavily on her RRSP. Without a spouse, she cannot split income and therefore pays higher taxes. She delays CPP and OAS to 70 for maximum benefit.

Income Source	Ages 65 to 69	Ages 70+
RRIF withdrawals	~$70–75,000	~$43–48,000
CPP (at 70)	–	~$17,000
OAS (at 70)	–	~$10,000
TFSA top-ups	as needed	as needed

Key takeaway: Singles face higher effective tax rates because they cannot split income. A couple could net $60,000 with about $65,000 of household gross income, while a single person needs closer to $74,000.

Putting It All Together

Start with your spending summary. Lay out the puzzle pieces: DB pensions, DCPP to LIRA to LIF, RRSP to RRIF, CPP, OAS, TFSA. Decide on your withdrawal cadence. Pay attention to unlocking windows for LIRAs, age choices for RRIF minimums, and government benefit deferrals. Fine tune your taxes by setting withholdings, using pension splitting if available, and claiming credits once you are eligible.

Retirement is not a single event. It is a series of financial transitions that together create your personal paycheque. Once you have lined up the puzzle pieces, the rest of retirement gets much simpler.

Like our Young Adult’s Smart Guide to Money, this post is meant to be a shareable evergreen resource. Use it yourself, send it to your spouse, your kids, or your newly retired friends.

It is a roadmap for turning decades of saving into a lifetime of steady income.