Retirement Tax Planning for Couples: Keep More of Your Retirement Income

Canadians spend decades working to save enough for retirement. Once retirement arrives, the question becomes how to draw that money down.

For couples, part of the answer is tax. Two different couples with identical household savings and CPP can pay different amounts of tax, depending on whose return the income lands on. Every dollar of tax you don't owe is a dollar you can compound and spend.

Start by Looking at Household Income

While the tax system assesses each person separately, a couple's retirement plan has to look at the overall household tax.

In this case, household retirement income is $110,000, but $90,000 of it is taxed on Alex's return. In 2026 the 14% federal rate ends at $58,523, so the top part of Alex's income is taxed at 20.5% while Jamie has unused room in the lowest bracket. We'll look at a few strategies below to move income from one return to the other.

Strategy 1: CPP Pension Sharing

CPP Pension Sharing is a Service Canada program that lets spouses and common-law partners share their CPP retirement pensions. It changes the actual deposits: part of the higher earner's monthly CPP is paid into the other spouse's account instead.

The total CPP benefit stays the same. Only the distribution between spouses changes. For couples with a gap in CPP entitlements, this lowers tax by moving taxable income from the higher-income spouse to the lower-income one.

To qualify, you need to be living together and both be at least 60. Each of you who paid into CPP needs to be receiving it or applying for it.

You don't choose the percentage. Service Canada pools the CPP each of you earned while you lived together and divides that pool 50/50. Anything earned before the relationship stays with the person who earned it. In the example from our full guide, a couple receiving $1,300 and $500 a month ends up with $950 and $850. The household still receives $1,800, but $350 a month has moved to the lower-income return.

Strategy 2: Pension Income Splitting

The CRA lets couples allocate up to 50% of eligible pension income to the other spouse when they file. There is no application to file. Eligible income for splitting includes workplace pensions, RRIF withdrawals (from age 65), and certain annuities (but you cannot split CPP).

The tax savings depend on the gap between your incomes. For couples whose incomes are already similar, the impact is small, and two of our case studies show it. Raj and Priya retire at 60 with $1.5 million and taxable incomes of $32,994 and $28,780. Their incomes are already so close that splitting doesn't change their bill. Tom and Lisa retire at 65 with $1 million, with more of it in Tom's RRSP. Both stay in the lowest federal and BC tax brackets, so Scenario Lab+ moves only $1,700 to $2,400 a year of Tom's RRIF income onto Lisa's return.

The savings grow with the gap. Take Alex and Jamie from the table above, and suppose $60,000 of Alex's income is a workplace pension. Moving half of it onto Jamie's return leaves them with taxable incomes of $60,000 and $50,000. For a couple in Ontario who are both 65, the Scenario Lab+ tax engine estimates their combined tax falls from $17,918 to $13,431. That is about $4,500 saved every year, with no change to what lands in their bank accounts.

Splitting tends to pay off when one partner's income reaches a higher bracket than the other's. For how it works and what qualifies, see our article on Pension Income Splitting.

Strategy 3: Managing the OAS Clawback

The OAS Recovery Tax, commonly called the clawback, catches couples because it ignores household income. A spouse with $120,000 of net income in 2026 repays about $3,700 of OAS, even if their partner earns very little.

CPP Pension Sharing and Pension Income Splitting can bring the higher-income spouse under the threshold, or closer to it. Our OAS clawback explainer walks through the calculation.

Strategy 4: RRIF Planning

From age 65, RRIF withdrawals are eligible for pension income splitting. Ordinary RRSP withdrawals are not. That gives some couples a reason to convert to a RRIF before they have to at 71.

Take Maria and Paul, both 65 and living in Ontario. Maria has a large RRSP and no workplace pension, and she needs $40,000 a year from it. Her CPP is $12,000 a year and Paul's is $8,000, and both receive OAS. If Maria takes the $40,000 as RRSP withdrawals, all of it is taxed on her return. If she converts to a RRIF first, she can allocate half of it, $20,000, to Paul's return, and each of them can claim the pension income amount. The Scenario Lab+ tax engine estimates their combined tax falls from $8,636 to $5,960, about $2,700 saved a year.

The trade-off is that a RRIF comes with a minimum withdrawal every year, so it suits couples who were going to draw on the account anyway.

Our RRIF guide covers conversion and the minimum withdrawals. If either of you has a locked-in pension account, see our article on LIRA and LIF: Managing Your Locked-In Pension Assets.

Putting It Together

No retirement plan gets tax to zero. A realistic aim is to fill the lower brackets on both returns and keep each spouse under the OAS threshold where you can. Each of you should also claim the credits you are entitled to, such as the pension income amount, and small savings each year add up over a retirement that may last 20 or 30 years.

Want to learn more? You can read some of our other guides here:

• What Are CPP and OAS (and Why Do They Matter?)
• Can Couples Split CPP Income in Canada?
• Pension Income Splitting in Canada
• Old Age Security Clawback Explained
• RRIF Explained
• LIRA and LIF: Managing Your Locked-In Pension Assets