RRSP and Old Age Security 2026: what a withdrawal really costs
Enter your province, your retirement income before withdrawals and the planned RRSP or RRIF withdrawal: the calculator adds the OAS that would be clawed back to the tax.
Real cost of the withdrawal
$10,481
Income above $95,323: the OAS pension is clawed back at 15%.
| Tax on the withdrawal | $9,029 |
| Extra OAS recovery | $1,452 |
| Effective rate | 41.9% |
Recovery threshold for 2026 income; the recovery never exceeds the pension received.
Prepared by Radif Partners · How we calculate · limits and tax tables read on canada.ca · estimates only, not a notice of assessment
An RRSP or RRIF withdrawal is added to your net income, and that income drives two federal retirement benefits. The Old Age Security pension is clawed back at 15% of net income above $95,323 for the 2026 income year ($93,454 for 2025). The Guaranteed Income Supplement is only paid when annual income stays below $23,112 for a single person, and RRSP and RRIF withdrawals count toward that income. A TFSA withdrawal counts for neither, whatever its size. The effect is easy to overstate: between those two thresholds, an RRSP withdrawal costs nothing but tax. In Ontario, with $85,000 of retirement income, a $20,000 RRIF withdrawal brings about $6,115 of tax and $1,452 of extra OAS clawed back, or 37.8% of the withdrawal.
The income that counts
Old Age Security and the Guaranteed Income Supplement are two federal benefits, but both look at the same figure: your income for the year. An RRSP withdrawal, a RRIF payment, an annuity, wages, interest: all of it goes into net income. TFSA withdrawals and TFSA income do not, as guide RC4466 points out. That is the real difference between the two accounts in retirement: a dollar out of an RRSP is income, a dollar out of a TFSA is not.
The difference only bites in two income ranges, though: at the bottom, where the Supplement can be paid, and at the top, where the OAS pension starts to be clawed back. In between, which is where many retirees sit, an RRSP withdrawal costs nothing beyond ordinary tax at the marginal rate.
The OAS clawback
When your net world income goes above the threshold for the year, you repay 15% of the excess, according to the federal page on the recovery tax. The repayment is withheld each month from the pension for the July-to-June period that follows the income year.
| Income year | Recovery threshold | Pension affected |
|---|---|---|
| 2025 | $93,454 | July 2026 to June 2027 |
| 2026 | $95,323 | July 2027 to June 2028 |
Above the threshold, then, an RRSP withdrawal costs the tax plus 15%. The next table follows a $20,000 RRIF withdrawal in Ontario, by the retirement income already earned in the year. As long as total income stays below $95,323, the OAS column stays at zero; in the table it first shows up on the $90,000 row, when the withdrawal crosses the line.
| Retirement income before the withdrawal | Tax on the withdrawal | Extra OAS clawed back | Total cost in % |
|---|---|---|---|
| $30,000 | $3,810 | $0 | 19.1% |
| $50,000 | $5,216 | $0 | 26.1% |
| $75,000 | $5,932 | $0 | 29.7% |
| $90,000 | $6,260 | $2,202 | 42.3% |
| $105,000 | $7,679 | $3,000 | 53.4% |
| $120,000 | $8,682 | $3,000 | 58.4% |
The Guaranteed Income Supplement
The Supplement is for people aged 65 or older who receive the OAS pension, live in Canada and have an annual income below the threshold for their situation, according to the GIS eligibility page.
| Situation | Annual income must be below |
|---|---|
| Single, divorced or widowed | $23,112 |
| Spouse receives the full OAS pension (couple income) | $30,528 |
| Spouse receives the Allowance (couple income) | $42,768 |
| Spouse does not receive OAS (couple income) | $55,392 |
In this range, an RRSP or RRIF withdrawal reduces the Supplement as well as being taxed, and a withdrawal that lifts income above the threshold removes it. The calculator does not put a figure on that reduction; it only flags that your income is in the GIS range. A TFSA withdrawal leaves the Supplement untouched. That is why the TFSA often comes up for people who expect a modest retirement income; the full comparison is on the RRSP vs TFSA page.
RRSP or TFSA with a small retirement income
A tie
$0
| RRSP contribution for the same effort | $6,177 |
| Of which tax refund | $1,177 |
| TFSA at the end | $10,469 |
| RRSP at the end, before tax | $12,933 |
Three retirees, three effects
A single person in Ontario living on $16,000 who takes $5,000 out of an RRSP stays under the GIS threshold, at $21,000. The tax on the withdrawal is small, about $889 before age credits, but the Supplement goes down: for this person a TFSA would have been the more useful account, and it is the one case where the gap can be large.
A second person receives $50,000 in pensions and withdraws $20,000 from a RRIF. They are too high for the Supplement and well below the OAS threshold, so the withdrawal costs about $5,216 in tax and nothing else. Many retirees are in this position, and for them the RRSP or TFSA question comes down to comparing tax rates.
A third already has $110,000. The same $20,000 withdrawal costs $8,222 in tax and $3,000 in clawed-back pension, or 56.1% of the amount. At that level, every dollar taken out of the RRSP bears the marginal rate plus 15%.
What you can adjust
Timing is the only lever. A withdrawal belongs to the calendar year it is made in, so the same amount can fall below the threshold one year and above it the next. In the year you turn 71, the RRSP has to be withdrawn, moved to a RRIF or used to buy an annuity, and a RRIF pays out a minimum amount each year from the year after it is set up, which narrows the room to manoeuvre. In a couple, whose name the account is in matters too: a spousal RRSP puts withdrawals in the spouse's income, with its own recovery threshold.
The withdrawal itself has tax withheld at source that takes neither the real tax nor OAS into account; the balance is settled on your return, see RRSP withdrawal tax.