Should I use my TFSA or RRSP first in retirement?

There's no universal answer. Drawing taxable RRSP/RRIF income earlier can shrink future mandatory RRIF minimums and smooth your tax rate, while saving the TFSA for last keeps flexible, tax-free money available. The best order depends on your brackets, benefits and estate goals.

What is an RRSP meltdown?

An RRSP meltdown means deliberately withdrawing from your RRSP in your 60s — before mandatory RRIF minimums and CPP/OAS start — to spread the tax over more years and reduce large forced withdrawals later.

The order to draw down your accounts in retirement

Most people assume you should spend your taxable, non-registered money first and leave the tax shelters for last. It's a reasonable default — but in Canada it's often not optimal, because of how RRIF minimums, OAS clawback and CPP timing interact.

The three buckets

Non-registered: only the growth is taxable, at favourable capital-gains rates.
RRSP / RRIF: every dollar withdrawn is fully taxable as income.
TFSA: completely tax-free, and doesn't count toward OAS clawback or GIS.

Why "taxable first" can backfire

If you leave your RRSP untouched until age 71, it keeps growing — and then mandatory RRIF minimums force out ever-larger taxable amounts, right when CPP and OAS have also started. That stack of income can push you into a higher bracket and into the OAS clawback zone.

The smoothing approach

A common, more tax-efficient pattern:

Melt down the RRSP early — draw modest RRSP income in your 60s while your other income is low, filling up the lower brackets.
Use non-registered and TFSA to top up spending without adding taxable income.
Delay CPP (and possibly OAS) so the guaranteed, indexed benefit is larger later — see the bridging strategy.
Keep the TFSA for last as flexible, tax-free money — great for lumpy expenses and for your estate.

It's a per-year decision

The "right" order isn't one bucket emptied before the next — it's a yearly mix that keeps your taxable income in the sweet spot. That's fiddly to do by hand, which is why modelling the whole drawdown, with tax and RRIF minimums, is the practical way to get it right.