Have You Turned 65? The Government May Owe You Up to $300 Per Year

Author: David Straznicky | June 25, 2026

• Accounting
• Accounting Services
• business accounting

Many Canadians over age 65 are missing a simple tax planning opportunity that may reduce their annual tax bill by approximately $300 per person.

The strategy involves converting a portion of an RRSP into a RRIF and withdrawing eligible pension income each year to claim the Federal Pension Income Amount. While the savings may not seem substantial at first glance, the benefit can continue year after year.

Understanding the $2,000 Pension Income Amount

Once an individual reaches age 65, certain types of retirement income become eligible for the Federal Pension Income Amount. One common source of eligible pension income is income received from a Registered Retirement Income Fund, or RRIF.

Simple Calculation

A Simple Strategy

1. Turn age 65.
2. Transfer a portion of an RRSP into a RRIF.
3. Withdraw at least $2,000 annually from the RRIF.

The withdrawal may qualify as eligible pension income and generate access to the pension income credit.

Example 1 – One Retiree

Mary is 65 years old. She transfers $25,000 from her RRSP into a RRIF and withdraws $2,000 during the year.

• Eligible pension income: $2,000
• Federal pension income credit: approximately $300
• Money stays under her control.
• No change is required to her overall retirement plan.

Example 2 – A Couple

Consider a husband and wife who are both over age 65. Each establishes a RRIF and withdraws $2,000 annually.

Over ten years, that could represent approximately $6,000 in tax savings.

Why Does Not Everyone Do This?

Many retirement discussions focus on investments, markets, and returns. Far fewer conversations focus on taxes. Reducing taxes can be one of the safest ways to improve retirement cash flow.

• You do not need a better stock market.
• You do not need higher investment returns.
• You simply need to take advantage of rules that already exist.

Important Considerations

The suitability of this strategy depends on individual circumstances, including income levels, current pension income, RRSP balances, OAS and GIS considerations, provincial tax implications, and estate planning objectives. Professional advice should be obtained before implementing any tax strategy.

Note: This content is intended for general information only and should not be treated as personal tax advice.