A Step-by-Step Retirement Planning Guide for Ontario Couples

Why Couples in Ontario Need a Coordinated Retirement Plan

Retirement planning for couples is fundamentally different from planning as an individual. You are coordinating two sets of government benefits, two sets of registered accounts, two different health timelines, and a shared lifestyle that depends on both plans working together.

I work with couples across London, Ontario who come in thinking they have a retirement plan because each spouse has an RRSP and a rough idea of when they want to stop working. That is a starting point, not a plan. A real retirement plan for couples coordinates every moving piece across both spouses to minimize lifetime taxes, maximize government benefits, and create reliable income.

Here is how to build one, step by step.

Step 1: Align on Retirement Lifestyle and Goals Together

Before touching a single number, you and your spouse need to have an honest conversation about what retirement looks like for both of you. One of you may picture spending winters in the south while the other wants to stay close to family in London, Ontario. One may want to retire at 55 while the other plans to work until 67.

These details determine how much income you need and how long it needs to last. Retirement spending is not flat: most couples spend more in the early active years, less in the middle quiet years, and more again later if health care costs rise.

Get specific. Estimate your desired annual spending in today's dollars. London, Ontario offers a lower cost of living than Toronto or Ottawa, but property taxes and day-to-day expenses still add up. A comfortable retirement for a couple in London typically requires $60,000 to $90,000 per year in after-tax spending.

Step 2: Inventory All Income Sources for Both Spouses

Once you know what you need, you need to map out what you have. For each spouse, document the following:

Canada Pension Plan (CPP): Log in to My Service Canada to see your estimated benefit at ages 60, 65, and 70. A spouse who took years out of the workforce will typically have a lower entitlement.

Old Age Security (OAS): Approximately $727 per month at age 65. Subject to clawback when individual net income exceeds approximately $90,997.

Employer pensions: Defined benefit and defined contribution pensions. Note the survivor benefit options.

RRSPs and RRIFs: Total balances for each spouse, including any locked-in accounts (LIRAs).

TFSAs: Total balances for each spouse.

Non-registered investments: Taxable investment accounts, including the adjusted cost base of holdings.

Other income: Rental properties, business income, part-time work, or any other sources.

Write all of this down in one place. You cannot build a coordinated plan if the information is scattered across four different institutions.

Step 3: Use Income Splitting Strategies

Income splitting is one of the most powerful tools available to Canadian couples in retirement, and Ontario's progressive tax system makes it especially valuable. The goal is to equalize taxable income between spouses so that neither spouse is paying tax at a much higher marginal rate than the other.

Pension Income Splitting After Age 65

Once either spouse turns 65, up to 50 percent of eligible pension income can be allocated to the other spouse for tax purposes. Eligible pension income includes payments from a registered pension plan, RRIF withdrawals (after age 65), and life annuity payments from an RRSP.

This is a paper transaction done on your tax returns. The money does not actually change hands. But the tax savings are real. If one spouse has $80,000 in pension and RRIF income and the other has $20,000, splitting $30,000 of the higher-income spouse's eligible pension income to the lower-income spouse moves both closer to the same marginal tax bracket. In Ontario, this can easily save $5,000 to $10,000 per year in combined taxes.

Spousal RRSP Contributions Before Retirement

Contributing to a spousal RRSP is one of the best ways to set up income splitting. The contributing spouse gets the tax deduction at their higher marginal rate; the receiving spouse withdraws later at their lower rate.

The key rule: withdrawals from a spousal RRSP are attributed back to the contributing spouse if the contribution was made in the current year or the two preceding calendar years. This strategy needs to be implemented well before retirement. If you are within five to ten years of retiring, talk to a financial planner about whether spousal RRSP contributions still make sense.

CPP Sharing

If both spouses are receiving CPP and are at least 60 years old, you can apply to share your CPP retirement benefits. Each spouse's share is based on the number of months you lived together during the contributory period.

CPP sharing can be particularly effective when one spouse has a much higher CPP benefit than the other. By equalizing CPP income, you reduce the higher-income spouse's marginal tax rate and may keep both spouses below OAS clawback thresholds.

Step 4: Build an RRSP Meltdown Strategy

If one spouse has a significantly larger RRSP than the other, there is a real risk that the forced RRIF minimum withdrawals starting at age 72 will push that spouse into the highest tax brackets and trigger OAS clawbacks.

The solution is an RRSP meltdown strategy. This means deliberately withdrawing from the larger RRSP in the years between retirement and age 72, when there may be lower taxable income. The goal is to draw down the RRSP balance gradually so that future RRIF minimums are smaller and more manageable.

For example, if one spouse retires at 60 with a $900,000 RRSP and no other income, the years between 60 and 65 represent an excellent window to withdraw $30,000 to $50,000 per year from the RRSP at relatively low marginal tax rates. Without this strategy, the RRSP continues to grow, and the mandatory minimums at 72 could easily push that spouse's income above $100,000, well into higher Ontario tax brackets and OAS clawback territory.

This requires careful modelling. You need to balance the tax cost of early withdrawals against the tax savings of smaller future RRIF payments. A proper tax planning analysis will show you the optimal withdrawal amounts year by year.

Step 5: Coordinate CPP Timing Between Spouses

Each spouse can start CPP as early as 60 (36 percent reduction) or delay to 70 (42 percent increase). The optimal timing is not necessarily the same for both spouses.

A common strategy: the lower-income spouse takes CPP early while the higher-income spouse delays to 70 to maximize the survivor benefit. When one spouse dies, the survivor benefit is based on the deceased's CPP amount, so a larger delayed CPP provides more security.

If both spouses are healthy and do not need CPP income immediately, delaying both can make sense. But taking one CPP early while delaying the other is a practical compromise if income is needed.

Step 6: Protect Your OAS

OAS is income-tested on an individual basis, with clawback beginning when individual net income exceeds approximately $90,997. The critical insight for couples: OAS is calculated on individual income, not combined household income. Income splitting strategies directly protect your OAS.

If you keep both spouses below the clawback threshold, you preserve roughly $17,500 per year in combined OAS payments. Strategies include pension income splitting, equalizing RRIF balances through spousal RRSPs, drawing from TFSAs when additional income would push you over the threshold, and timing capital gains in lower-income years.

Step 7: Plan for Healthcare Gaps

OHIP covers physician and hospital services, but significant gaps exist. If one spouse retires before 65, they lose employer drug coverage and must find private coverage ($200 to $400 per month) until the Ontario Drug Benefit kicks in. Neither OHIP nor ODB covers dental or vision care.

Long-term care is expensive ($5,000 to $10,000 per month for quality Ontario facilities), and couples should discuss whether life insurance or critical illness insurance should be part of the plan. Budget for the gap between retirement and age 65, a cost that surprises many couples in London, Ontario.

Step 8: Address Estate Planning for Couples

Estate planning for couples is where retirement planning and estate planning intersect most directly.

RRSP and RRIF Rollover to the Surviving Spouse

When the first spouse dies, RRSPs and RRIFs can roll over to the surviving spouse on a tax-deferred basis if the surviving spouse is named as the beneficiary. This avoids an immediate tax bill. However, when the surviving spouse eventually dies, the full remaining RRIF balance is included in their final tax return as income. Planning ahead by drawing down RRSPs during both spouses' lifetimes directly reduces this final tax hit.

Ontario Estate Administration Tax

Ontario charges 1.5 percent on estate assets above $50,000. Assets with named beneficiaries (RRSPs, TFSAs, life insurance) and jointly held property avoid probate. Ensuring proper beneficiary designations and joint tenancy on the family home can significantly reduce these costs.

Survivor Income Planning

When the first spouse dies, the survivor loses one OAS payment and may see reduced CPP. The survivor also loses the ability to split pension income. Meanwhile, fixed costs like housing, utilities, and property tax do not drop by half.

This income squeeze is one of the most overlooked risks in couples retirement planning. Life insurance, structured to cover the gap between the survivor's reduced income and their ongoing expenses, is one solution. Another is building a TFSA cushion that can provide tax-free income to the surviving spouse without triggering OAS clawbacks.

Step 9: Establish a Tax-Efficient Withdrawal Order

The order in which you draw from different accounts can make a substantial difference over a 25- to 30-year retirement. Here is the general framework for Ontario couples.

In low-income years (between retirement and age 65 before CPP and OAS begin), prioritize RRSP and RRIF withdrawals to fill low tax brackets.

In moderate-income years (once CPP, OAS, and pensions are flowing), draw from RRIF minimums and non-registered accounts. Use TFSAs to top up spending without increasing taxable income.

In high-income years, minimize RRSP and RRIF withdrawals beyond the mandatory minimum and rely on TFSA withdrawals.

Non-registered accounts should generally be drawn down before TFSAs, since non-registered accounts create annual taxable income. TFSAs should be the last accounts drawn down, as they provide the most flexibility for the surviving spouse.

For couples, coordinate withdrawals between both spouses based on who has more room in lower tax brackets. This is where working with an advisor who specializes in investment management makes a real difference.

Step 10: Review and Adjust Regularly

A retirement plan is a living strategy that needs regular updates. Review it annually, and specifically whenever tax laws change, health situations shift, you experience a major life event, or your spending patterns evolve (the early retirement travel years may give way to quieter years at home in London, Ontario).

Every five years, do a full reset: rerun income projections, update CPP and OAS estimates, review withdrawal sequencing, and check that estate documents reflect current wishes.

Build Your Couples Retirement Plan

If you and your spouse are within ten years of retirement, or already retired and wondering whether your current approach is optimized, a coordinated couples plan can make a meaningful difference to your financial security.

As a financial planner serving London, Ontario and surrounding communities, I help couples build retirement income plans that coordinate every element: tax-efficient withdrawals, government benefit optimization, income splitting, healthcare planning, and estate planning for the surviving spouse.

The strategies outlined in this guide interact with each other in ways that are difficult to model on your own. The right CPP timing affects your OAS clawback, which affects your withdrawal sequencing, which affects your tax brackets, which affects your income splitting benefit. Getting all of these pieces working together is exactly what comprehensive retirement planning is designed to do.

Book a free 15-minute call and bring your questions. We will map out where you stand today, identify the opportunities you may be missing, and build a step-by-step plan to get you and your spouse to the retirement you have been working toward.