I hear so much here about back door roths, conversion ladders, etc, but not much about optimizing RE taxes from RRSP income. Let's talk about the mechanics of RE in Canada using an RRSP.
My current financial plan involves saving $400k in each of our RRSPs and withdrawing 20k gross income each starting around age 50. I realize income tax is due. Maxed TFSAs will supplement, and likely some part time work. No plans for a taxable account, as we've got lots of RSP contribution room to hit 400k each with the use of a spousal RRSP and two individual ones.
With <40k income, the current BC/Fed tax rate is 23%. Not a problem, it's in the plan. Today, I don't pay 38% on the income I save in RRSP and Spousal.
At 71, the RRIF minimum withdrawals will be low enough to not worry because we've been spending the RRSP for 20 years already.
But... On a RRSP withdrawal of cash from age 50-71, the withholding tax is 30% on the assumption it's not your only income.
How to best plan for this? Paying 30% up front to get a 7% tax refund hardly seems like a good idea. Save up a Taxable account instead of RRSP but pay capital gains each year? Transfer the whole or partial RRSP to an RRIF at age 50?