Total Canadian retirement income.
After-tax monthly income
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Gross monthly
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Annual after-tax
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Your breakdown
Updates live as you type| Source (monthly) | Amount | Taxable? |
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Worked example
Take the default retiree drawing $1,200 a month of CPP, $728 of OAS, $2,000 from an RRSP or RRIF, and $500 from a TFSA, at a 22 percent average tax rate. Three of those four sources are taxable: CPP, OAS, and the RRSP/RRIF withdrawal add up to $3,928 a month of taxable income. At a 22 percent average rate that is about $864 of tax, leaving $3,064 after tax from the taxable streams. The TFSA withdrawal is tax-free, so its full $500 is added back on top, giving after-tax monthly income of about $3,564, or roughly $42,766 over the year. Gross monthly income across all four sources is $4,428, so tax takes a little under a fifth of the total. The reason the TFSA is listed last and pulled last in practice is that it does not count toward the income that triggers the OAS clawback, making it the cleanest dollar to spend in higher-income years.
How it is calculated
The tool builds total retirement income by adding four monthly streams and treating them according to how the CRA taxes each. CPP, OAS, and RRSP or RRIF withdrawals are fully taxable income, so they are summed and an average tax rate is applied to estimate the tax bite. TFSA withdrawals are not taxable and not even reportable, so they bypass the tax calculation and are added to the after-tax total in full. The result is an after-tax monthly figure and its annualised equivalent, alongside the gross total before tax. Using a single average rate is a simplification: real tax is progressive and depends on pension income splitting, age and pension credits, and provincial rates, so the figure is an estimate rather than a return calculation. The order in which you draw accounts matters too, because keeping taxable income lower can protect income-tested benefits like OAS, which is why the conventional sequence spends non-registered and registered money before the TFSA.