When you’ve spent decades building wealth on both sides of the Canada–U.S. border, the challenge of retirement isn’t just reaching financial independence — it’s decumulating wisely. Withdrawal planning is the central question for retirees:

How much can you spend each year without outliving your savings?
Which accounts should you draw from first?
How do government programs — CPP, OAS, and Social Security — change the math?
How can you minimize tax drag when income streams span both Canada and the U.S.?

At Cardinal Point Wealth Management, we specialize in helping cross-border families answer these questions. In this guide, we’ll explore in depth:

Safe withdrawal rate research and why the “4% rule” doesn’t always fit.
Tax-efficient sequencing of withdrawals across RRSPs, RRIFs, IRAs/401Ks, Roth IRAs, TFSAs, and brokerage accounts.
Coordinating public pensions across Canada and the U.S.
Spending patterns and lifestyle costs unique to cross-border retirees.
Managing taxes, clawbacks, RMDs, and double-taxation risks.
Longevity, inflation, and market risk management.
Case studies that illustrate real-life cross-border withdrawal strategies.
A practical checklist for sustainable retirement income.

Rethinking the “Safe Withdrawal Rate”

The 4% Rule — Origins and Limits

The 4% rule, developed from U.S. data in the 1990s, suggested a retiree with a balanced portfolio could withdraw 4% annually (adjusted for inflation) with a high likelihood of not running out of money over 30 years. However, for cross-border retirees, this rule needs modification:

Tax regimes: Canadian and U.S. taxation differs in how withdrawals are taxed, meaning the same gross withdrawal could leave very different net cash flows.
Currency fluctuations: A Canadian spending $100,000 CAD annually in Florida is exposed to USD/CAD swings.
Longevity trends: With many high-net-worth couples living into their 90s, a 30-year horizon may be too short.
Market environments: Forward-looking returns suggest lower expected bond yields and potentially more volatile equity performance than the historical data behind the 4% rule.

What’s More Realistic?

Recent research points to:

3.0%–3.5% as a more sustainable long-term starting point for withdrawals.
Dynamic withdrawal rules (adjusting spending up or down based on portfolio performance) outperform rigid inflation-adjusted withdrawals.
Floor-and-upside approaches: Secure a base level of guaranteed income (CPP, OAS, Social Security, annuities) to cover essentials, then use portfolio withdrawals flexibly for discretionary spending.

Withdrawal Sequencing: Which Accounts First?

One of the most valuable levers in cross-border planning is choosing the order of withdrawals. The sequence can add years of sustainability to a portfolio and reduce lifetime tax liability.

Canadian Accounts

RRSP/RRIF: Fully taxable in Canada; must convert to a RRIF by age 71, with mandatory withdrawals starting at 5.28% at 72 and increasing thereafter.
TFSA: Tax-free withdrawals; often best preserved for later years or legacy goals.
Non-registered accounts: Preferential tax treatment for Canadian dividends and capital gains.

U.S. Accounts

IRA/401(k): Tax-deferred; RMDs begin at age 73 (2025 rules). Distributions taxed as ordinary income.
Roth IRA: Tax-free withdrawals if qualified; ideal for late retirement or legacy planning.
Taxable brokerage: Gains and dividends are taxed preferentially; flexible source for bridging retirement before Social Security begins.

Cross-Border Wrinkles

RRSPs: Treaty allows tax deferral in the U.S. federally, but some states, such as California, do not follow this tax deferral for state purposes.
Roth IRAs: Canada recognizes tax-free treatment under the treaty as long as contributions stop after Canadian residency begins.
Double taxation: Foreign tax credits can mitigate but not always eliminate overlap. Careful coordination is required.

Strategic Patterns

Early retirement (before pensions start): Spend taxable accounts, modest RRSP/IRA withdrawals.
Mid-retirement (70s): Use pensions plus RMD/RRIF minimums; blend with taxable income to smooth brackets.
Late retirement (80s+): Supplement with Roth/TFSA withdrawals for tax-free liquidity.

The Role of CPP, OAS, and Social Security

Public pensions reduce portfolio withdrawal needs and act as longevity insurance.

Canada Pension Plan (CPP)

Maximum benefit at 65 (2025): ~$16,000 CAD/year.
Deferral to 70 increases payments by 8.4% per year.
Indexed to inflation.

Old Age Security (OAS)

Full benefit at 65 (2025): ~$8,500 CAD/year.
Deferral to 70 increases payments by 7.2% annually.
Subject to clawback starting at ~$87,000 CAD net income (2025).

U.S. Social Security

Average benefit at full retirement age (FRA): ~$23,000 USD/year.
Maximum benefit at 70 (2025): ~$58,500 USD/year.
Deferral increases by 8% per year beyond FRA.
Taxable in both Canada and the U.S. (with treaty guidance).

Integration

For a retiree with multiple pensions:

Deferring Social Security and CPP/OAS creates higher guaranteed income for life, reducing sequence-of-returns risk.
Coordinating benefit start dates with RRIF/RMD requirements prevents income “stacking” that could push you into higher tax brackets or trigger OAS clawbacks.

Spending Patterns: Retirement’s “Smile Curve”

Research shows retirement spending typically follows three phases:

Early retirement (65–75): Higher discretionary spending — travel, hobbies, second homes.
Mid retirement (75–85): Spending stabilizes as activity declines.
Late retirement (85+): Healthcare and long-term care costs rise significantly.

Cross-Border Spending Factors

Currency costs: Fluctuations in CAD/USD can alter real purchasing power.
Healthcare:
- Canadians in the U.S. may not qualify for Medicare.
- Americans in Canada rely on provincial coverage, which varies by province.
Lifestyle costs: Maintaining homes in both countries, paying duplicate insurance, and travel costs add complexity.

These real-world spending patterns underscore the need for flexibility in withdrawal strategies.

Tax-Efficient Withdrawal Tactics

For Canadian Residents with U.S. Assets

Prioritize RRSP/RRIF withdrawals before 71 to smooth tax brackets and minimize later mandatory minimums.
Claim foreign tax credits for U.S. withholding on pensions.
Use non-registered accounts for capital gains treatment.

For U.S. Citizens in Canada

Potentially avoid TFSAs, FHSAs, and RESPs (tax-inefficient under U.S. law).
Preserve Roth IRAs as tax-free withdrawals in Canada.
Balance IRA withdrawals with Canadian bracket thresholds to avoid excess marginal taxation.

Cross-Border Blended Strategy

Early retirement: Withdraw from taxable brokerage and small amounts from RRSP/IRA.
Age 65–70: Delay CPP, OAS, and Social Security to maximize benefits.
Age 70+: Use pensions as base income, combine with RRIF/RMD distributions.
Age 80+: Supplement income with Roth/TFSA for tax-free withdrawals.

Longevity, Inflation, and Sequence Risk

The “big three” retirement risks require active management:

Longevity risk: Couples should plan for a 30–35 year horizon if retiring around age 65.
Inflation risk: Healthcare and cross-border living costs often rise faster than general inflation.
Sequence of returns risk: Early market downturns can permanently damage sustainability.

Mitigation Tools

Cash wedge: Hold 2–3 years of expenses in cash or short-term bonds.
Annuities: Consider for lifetime income floors (though less common in Canada).
Dynamic withdrawal rules: Adjust withdrawals annually based on portfolio performance (e.g., “guardrail” strategies).

Case Studies

Case Study 1: Canadian Snowbirds

Couple spends $90,000 CAD/year, half in Florida.
Strategy: Withdraw RRSP and any IRA proportionally, hedge USD exposure, use TFSA for medical surprises, avoid OAS clawback with income smoothing.

Case Study 2: U.S. Citizen in Canada

Needs $120,000 CAD/year.
Strategy: Blend IRA withdrawals with Canadian dividends, delay Social Security/CPP, use Roth IRA in late retirement for tax-free spending, assess the use of a TFSA given passive foreign tax credits accumulating on the U.S. tax return due to taxable brokerage income.

Case Study 3: Dual-Worker Canadian Citizen Couple

Both worked in Canada and the U.S., retiring in Vancouver with a California condo.
Strategy: Coordinate CPP, OAS, and Social Security start dates; draw from taxable brokerage first; potentially sell U.S. condo before RMDs start to manage capital gains and estate tax exposure.

Checklist for Sustainable Cross-Border Withdrawals

Determine annual spending needs in both currencies.
Model safe withdrawal rates (3–3.5% baseline).
Sequence withdrawals across accounts for tax efficiency.
Time CPP, OAS, and Social Security for maximum benefit.
Plan around OAS clawbacks and U.S. RMDs.
Incorporate healthcare and cross-border living costs.
Reassess annually as laws, markets, and needs evolve.

Conclusion

Retirement success isn’t defined by your portfolio balance on the day you retire — it’s defined by how effectively you can turn assets into income for decades, across multiple currencies, and under two tax regimes.

Withdrawal planning is the linchpin. By coordinating accounts, pensions, taxes, and spending needs, cross-border retirees can maximize after-tax income, minimize risk, and enjoy a lifestyle that reflects decades of hard work.

At Cardinal Point Wealth Management, our cross-border expertise ensures your withdrawal strategy is both sustainable and tax-smart. Whether you’re a snowbird, a U.S. citizen living in Canada, or a Canadian with U.S. assets, we’ll help you chart the right course.

Cross-Border Canada–U.S. Retirement Planning – Withdrawal Rates and Spending Strategies for 2025 and Beyond