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Naive vs. optimal drawdown: what the sequencing actually does

October 12, 2026· 6 min read

The whole point of a retirement income sequencer is to do better than the "naive" order — the conventional drawdown most people default to. This post breaks down, in simple terms, what each strategy does, where each one works, and the honest trade-offs.

The conventional (naive) drawdown

This is the order most retirees follow by default:

  • Draw non-registered accounts first.
  • Then draw RRSP / RRIF.
  • Leave the TFSA until last.

Why people do it:

  • Defers tax on registered accounts as long as possible.
  • Keeps TFSA compounding tax-free for as long as possible.
  • Simple and intuitive — "spend the taxed money first."

Where it can hurt you:

  • The RRSP keeps growing untouched through your 60s.
  • At 71, RRIF minimums kick in — and they're a percentage of a large balance.
  • Those mandatory withdrawals land on top of CPP and OAS.
  • The combined income can push you into higher brackets and trigger OAS clawback in your 70s and 80s.
  • This is the so-called "tax torpedo": years of low tax followed by a cluster of high-tax years.

The tax-smoothing (proactive) drawdown

This is the order the tool's optimized strategy uses:

  • Early RRSP meltdown between ages 60 and 71, up to a taxable-income target.
  • Then non-registered accounts.
  • Then TFSA for the remainder.

What "early meltdown" means:

  • Each year before 71, draw enough from the RRSP to fill your low tax brackets — up to a set taxable-income level (the "tax-smoothing target").
  • The goal is to shrink the RRSP balance before RRIF minimums force the issue.
  • Smaller balance at 71 → smaller minimums → less forced taxable income later.

Where it works best:

  • Large RRSPs that would otherwise grow into big RRIF minimums.
  • Retirees with little other taxable income in their 60s (unused low brackets).
  • Situations where spreading income evenly lowers OAS clawback exposure across more years.

Where it's less helpful:

  • Small RRSPs that will be consumed quickly anyway.
  • Large defined-benefit pensions that already fill the low brackets.
  • Cases where early RRSP withdrawals would themselves trigger clawback (the target should stay below the clawback threshold).

The honest caveat: "optimized" ≠ always less tax

The optimized strategy aims to smooth taxable income and reduce future RRIF pressure — but it does not guarantee lower lifetime tax in every scenario. Outcomes depend on:

  • Your account balances and their relative sizes.
  • Your assumed investment returns.
  • Your CPP/OAS start ages and pension income.
  • Your province's tax brackets and credits.
  • Your spending target and inflation assumptions.

In some cases — for example, when returns are high and the RRSP compounds faster than it's drawn down — the optimized order can produce similar or even higher lifetime tax than the naive order. The tool shows both scenarios side-by-side so you can see the trade-off each year, not just the headline number.

What to look at in the tool

  • The Optimized vs. Naive comparison chart shows annual net cash and tax under each strategy.
  • The year-by-year comparison table breaks down gross income, tax, OAS clawback, and net cash — with the difference highlighted (green favours the optimized strategy).
  • The lifetime tax figure in the summary shows the total tax paid under each order.

Bottom line: the sequencer's value isn't a promise of tax savings — it's a structured way to see how withdrawal order changes your income, tax, and clawback year by year, so you can choose the order that fits your situation.

Try it yourself

Model your own retirement income sequence with the free tool.

Open the Sequencer