Quick answer: If you have a substantial RRSP and other income to bridge to 70, delaying CPP often saves tens of thousands in lifetime tax. Drawing the RRSP down between 65 and 70 converts it at lower marginal rates and locks in the 42% CPP boost for life.
What this means: The bigger your RRSP relative to your needed retirement income, the more this strategy wins. Healthy 65-year-olds with $300K+ in RRSP and modest other income usually come out ahead by retirement-end. Poor health flips the math — take CPP at 65.
What to do next: See the breakeven math for delaying to 70. CPP at 65 vs 70 →
For most Canadians with a sizeable RRSP, drawing from the RRSP between 65 and 70 to delay CPP produces a higher lifetime income than the reverse. CPP delayed to 70 pays 42 percent more per month than CPP at 65, indexed to inflation, and continues for life. RRSP withdrawals between 65 and 70 are taxable but do not have a deferral bonus. Spending RRSP first effectively buys a larger, indexed government annuity in exchange for taxable RRSP income now. This works best for retirees with average or better life expectancy and limited other income.
Why the math usually favours delaying CPP
- The 0.7 percent per month CPP delay bonus compounds to a 42 percent lifetime increase by age 70.
- That bonus applies to the inflation-indexed CPP amount, so the dollar value of the bonus grows with CPI.
- Each extra year of CPP delay sets a higher base for cost-of-living adjustments going forward.
- RRSP withdrawals can be timed in lower-income years to use up unused tax brackets.
- Reducing RRSP balances before age 71 lowers the size of the mandatory RRIF minimum withdrawal, which in turn lowers OAS clawback risk.
Worked example: $400,000 RRSP, average earner
A 65-year-old has accumulated CPP credits for $1,300/month at 65, and a $400,000 RRSP. Other income at age 65 is zero. Two strategies:
| Strategy | Age 65 to 70 income | Age 70+ guaranteed CPP | RRSP balance at 70 |
|---|---|---|---|
| Take CPP at 65, leave RRSP alone until 71 | CPP $1,300/mo + OAS $743/mo = $24,516/yr | $1,300/mo (will continue to be indexed) | ~$520,000 (assuming 6% return) |
| Delay CPP to 70, withdraw $25,000/yr from RRSP between 65 and 70 | RRSP $25,000 + OAS $743 × 12 = $33,916/yr (then OAS deferred at 70 if desired) | $1,846/mo (+42%) | ~$365,000 (assuming 6% return) |
By 85, the second strategy has paid out approximately the same total but with more of it in inflation-indexed CPP and OAS, which is more reliable than RRSP returns. By 90, the second strategy is meaningfully ahead.
When delaying CPP does not pay off
| Situation | Why early CPP wins |
|---|---|
| Below-average life expectancy | Each year of delay foregoes payments. Below age 78, take CPP early or at 65. |
| RRSP funds needed for non-discretionary spending | Cannot afford to drawdown faster. |
| Significant other income | RRSP withdrawals at 65-70 will be taxed at high marginal rates; delay benefit may be diluted. |
| OAS already at clawback level from other sources | Boosting future income with delayed CPP can lock in OAS clawback. |
| Disability or near-poverty income | GIS may be more valuable than CPP delay; take CPP earlier. |
Tax bracket arbitrage
The strategy depends on filling lower tax brackets between 65 and 70 with RRSP withdrawals. Federal brackets in 2026:
| Bracket | Federal rate |
|---|---|
| Up to $58,523 | 14% |
| $58,523 to $117,045 | 20.5% |
| $117,045 to $181,506 | 26% |
| $181,506 to $258,510 | 29.32% |
| Over $258,510 | 33% |
An RRSP withdrawal of $25,000-$50,000 per year between ages 65 and 70 typically lands at the 14 percent or 20.5 percent federal bracket plus the relevant provincial rate. The same dollars added to a $90,000+ income later in life would land at 26 percent federal plus higher provincial rates.
Withdrawing from an RRSP at 65-70
You do not have to convert your RRSP to a RRIF before age 71. You can take ad hoc lump-sum withdrawals, set up a series of withdrawals, or convert early to a RRIF to use the pension income amount and pension splitting after 65. Each lump-sum withdrawal has withholding tax (10/20/30 percent depending on amount), but the full withdrawal is included in income on the T1 and any over-withholding is refunded.
Practical sequencing
- Estimate life expectancy honestly. If average or better, default to delaying CPP.
- Project income at age 65, 70, 75, 80 with and without CPP delay. Use CPI-indexed CPP figures.
- Plan RRSP withdrawals to fill lower tax brackets between 65 and 70.
- Convert RRSP to RRIF in the year you turn 71. Mandatory minimum withdrawals start at 5.28% at age 71.
- Re-evaluate at each birthday between 65 and 70 if income or health changes.
Cross-references
- CPP Start-Age Decision: 60 vs 65 vs 70
- RRSP to RRIF Strategy Before Starting CPP and OAS
- CPP and OAS Together: When to Start Each Benefit
Frequently asked questions
- Should I delay CPP if I have an RRSP?
- Most Canadians with average or better life expectancy benefit from drawing from the RRSP between 65 and 70 and delaying CPP to 70. The 42 percent CPP increase is indexed for life, while RRSP withdrawals are not.
- How much does delaying CPP increase the monthly payment?
- 0.7 percent per month after age 65, up to a maximum 42 percent increase at age 70.
- Is there any deferral bonus on RRSP balances?
- No, only continued investment growth. RRSPs do not have a government-guaranteed deferral bonus the way CPP and OAS do.
- What is the CPP delay break-even age compared to taking CPP at 65?
- Approximately age 81 to 82 in nominal dollars. With CPI indexing, the break-even is similar in real dollars but the upside grows for those who live past 85.
- Will RRSP withdrawals affect OAS clawback?
- Yes. RRSP withdrawals are taxable income that counts toward the OAS recovery tax threshold ($93,454 of 2025 net income for OAS paid July 2026 to June 2027).
- Can I withdraw from RRSP before converting to RRIF?
- Yes. Lump-sum RRSP withdrawals can be taken at any age. Conversion to RRIF must happen by the end of the year you turn 71.
- When does delaying CPP not make sense?
- When life expectancy is below average, when RRSP funds are needed for current spending, or when a high other income would push 65-70 RRSP withdrawals into top brackets.