Convert RRSP to RRIF at 65 or Wait Until 71 in Ontario?

One of the most common retirement planning questions Ontarians face is whether to convert their RRSP to a Registered Retirement Income Fund (RRIF) as soon as they turn 65, or hold off until the government's mandatory deadline at age 71. The honest answer is: it depends on your income, your tax situation, and what else you have coming in. There is no single right age for everyone. Understanding the mechanics of each path, though, gives you a much clearer picture of what's at stake.

The Basics: What the Rules Actually Say

Canadian tax law requires you to close your RRSP by December 31 of the year you turn 71. You have three options at that point: convert to a RRIF, purchase an annuity, or withdraw everything as a lump sum (which most people avoid because it triggers a large tax bill in one year). Converting to a RRIF is the most common route.

What many people don't realize is that you can convert to a RRIF at any point before 71 — there is no minimum age. You can also do a partial conversion, moving only a portion of your RRSP into a RRIF while leaving the rest untouched. Once a RRIF is open, the government requires you to withdraw a minimum percentage each year, starting at around 4% at age 65 and rising gradually as you age. Those withdrawals are fully taxable as income in the year you receive them.

The Case for Converting at 65

The biggest reason to consider converting some or all of your RRSP at 65 is the pension income tax credit. In Canada, once you turn 65, RRIF income qualifies as "eligible pension income," which means the first $2,000 you withdraw can attract a federal tax credit worth roughly $300. Ontario offers a matching provincial credit. That is not a fortune, but it is free money sitting on the table if you were going to withdraw anyway.

The more powerful benefit is pension income splitting. If your spouse or common-law partner is in a lower tax bracket, you can allocate up to 50% of your eligible RRIF income to them on your tax returns. For couples with unequal incomes, this can significantly reduce the total tax the household pays. Marc Pineault, a retirement planner in London, Ontario, often works with couples in this situation and notes that income splitting can be one of the highest-impact strategies available in early retirement — but only if the timing is right for your overall picture.

The Case for Waiting Until 71

Keeping your money inside an RRSP until 71 means continued tax-deferred growth. You are not paying tax on investment gains each year, and no mandatory withdrawals are forcing money out before you need it. If you have other income sources in your 60s — a defined benefit pension, rental income, or substantial non-registered savings — adding RRIF withdrawals on top could push your net income into a higher bracket or trigger an OAS clawback. In 2026, OAS recovery tax begins above roughly $90,000 in net income. Withdrawing from a RRIF when you don't need the money can cost you more than the pension credit is worth.

There is also the GIS consideration for lower-income retirees. If your income is modest enough that you receive the Guaranteed Income Supplement, additional RRIF withdrawals reduce your GIS dollar-for-dollar above a certain threshold. For some Ontarians, deferring RRIF income protects a significant government benefit.

The Middle Path: Partial Conversion and Gradual Drawdown

Many retirement planners recommend a middle-ground strategy: do a partial RRSP-to-RRIF conversion at 65 — just enough to trigger the pension income credit and enable income splitting — while leaving the bulk of the RRSP to continue growing tax-deferred. This approach captures the tax credit without forcing large taxable withdrawals you don't need.

It is also worth thinking about whether gradually drawing down your RRSP in your late 60s reduces the size of your mandatory RRIF withdrawals at 71 and beyond. A very large RRIF balance at 71 can force withdrawals that exceed your spending needs, inflating your income in your 70s and 80s when it may be harder to use the money efficiently.

The Right Time to Have This Conversation

The RRSP-to-RRIF decision intersects with CPP timing, OAS deferral, spousal income, and the trajectory of your non-registered accounts. None of those can be looked at in isolation. Marc Pineault works with retirees and pre-retirees across London, Ontario to map out the order and timing of income streams so that withdrawals happen at the right tax rate, at the right time, with as little waste as possible.

If you are approaching 65 and wondering whether now is the moment to act — or whether waiting serves you better — booking a consultation is the right first step. A conversation with Marc can help you see the full picture before you make a move that cannot easily be undone.

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.