Your after-tax income in retirement depends on the strategy you choose in drawing income from different sources. It also depends on where you live.
On average, a 65-year-old couple retiring in 2023 with $800,000 in RRSPs and $100,000 in TFSAs would be able to generate total after-tax income including CPP, OAS and GIS of $115,600. (This is the amount expressed in constant dollars so it reflects future inflation.)
As the chart shows, however, the actual amount varies by province and by territory since income tax rates and tax brackets vary across Canada.
Geographically, the numbers generally get better from east to west and also from south to north. The figures in the chart represent the optimized situation as calculated by Mygoals Inc. (My thanks to Raphi Zaionz and Kosal Chhin, who ran the numbers.) Optimization generally involves starting CPP at age 70 and drawing down one’s RRSP balances a little faster before 70.
Somewhat curiously, it was optimal to start OAS at 70 in only three of the 13 jurisdictions. And in two jurisdictions, the optimal strategy also allowed this couple to draw the Guaranteed Income Supplement (GIS) in certain years.
What the chart doesn’t show is the cost of living by province or jurisdiction, which may offset some of the income advantages expressed in the chart. Hence, a national rush to retire in Nunavut may not materialize.
Frederick Vettese is former Chief Actuary of Morneau Shepell and author of the PERC retirement calculator (www.perc-pro.ca)
