Linda (58) and Robert (60) are planning for retirement in two years. They have accumulated $1.2 million in their combined RRSPs, $200,000 in TFSAs, and $500,000 in non-registered investments. They also have a $500,000 mortgage on their home. They want to ensure they have sufficient income throughout retirement, reduce taxes, and leave an inheritance for their children. Which strategy is most integrated and beneficial?

Question: Linda (58) and Robert (60) are planning for retirement in two years. They have accumulated $1.2 million in their combined RRSPs, $200,000 in TFSAs, and $500,000 in non-registered investments. They also have a $500,000 mortgage on their home. They want to ensure they have sufficient income throughout retirement, reduce taxes, and leave an inheritance for their children. Which strategy is most integrated and beneficial?

Answer options:

• Liquidate a portion of their non-registered investments to pay down their mortgage entirely, then focus on TFSA withdrawals in retirement.
• Convert RRSPs to RRIFs at 65, drawing minimums, and supplement income with TFSA withdrawals, deferring non-registered withdrawals as long as possible. ✅ Use non-registered investments to fund early retirement years, deferring CPP/OAS and RRSP/RRIF withdrawals to later ages.
• Purchase a segregated fund within their non-registered account to obtain creditor protection and potential estate advantages upon death.

Correct answer: Use non-registered investments to fund early retirement years, deferring CPP/OAS and RRSP/RRIF withdrawals to later ages.

Explanation: Using non-registered funds first allows for deferral of taxable CPP/OAS and RRSP/RRIF withdrawals, potentially reducing overall lifetime tax. This strategy also maximizes the tax-deferred growth within RRSPs and tax-free growth within TFSAs for a longer period, benefiting both income sustainability and estate planning.