Back to Learn Withdrawal Sequencing

The tax-smoothing target, in plain terms

Tax smoothing means deliberately filling your low tax brackets every year — not waiting until you're forced into higher ones.

The idea

•You pick a target taxable income — often the top of the lowest bracket (~$57k federal + provincial).
•Each year you draw just enough RRSP/RRIF to reach that target after CPP, OAS, and pension.
•The rest of your spending comes from TFSA (which adds nothing to taxable income) and non-registered (which adds only 50% of capital gains, so much less per dollar than RRIF income).

•If you leave your RRSP untouched until 71, it grows large and converts to a RRIF with big forced minimums.
•Those minimums can push you into higher brackets and trigger OAS clawback — tax you can't avoid.
•Smoothing spreads the same total income across more years at a lower rate, instead of bunching it into a few high-tax years.

•Your preferred target is one search candidate, alongside indexed credit and bracket thresholds and different account orders.
•Fixed-spending mode refines targets for four age phases. Mandatory RRIF payments begin at 72 under the model's end-of-71 conversion assumption; voluntary withdrawals and LIF caps are still respected.
•Policies are evaluated over the complete plan for sustainability and total tax exposure, including estimated tax on remaining assets. A lower annual tax bill is not guaranteed.

Try a preferred tax-smoothing target and compare the selected policy's total tax exposure and ending assets.