The Legacy Puzzle: Protecting What You Leave Behind

If you are financially secure in retirement and your retirement assets exceed your needs, your biggest challenge is no longer whether your income will last. It is how your income decisions today affect what ultimately remains for your heirs.

Your challenge is not whether you have enough income, but how your income is structured—and how exposed it is to taxes and benefit rules over your lifetime and at death.

For legacy‑focused retirees, retirement income planning and estate planning are inseparable. Canada’s retirement income system tends to concentrate taxes at death, often in ways that are not easily understood.

Registered assets are a prime example. At death, RRIF balances are fully included as income on the final tax return of the latter spouse to die. Long‑deferred growth is taxed all at once, frequently at marginal tax rates exceeding 50% and, in some provinces, approaching 53%.

If you were to die with a RRIF of $1 million and no surviving spouse, you will pay at least $496,000 lost to tax before a dollar reaches your heirs with every additional dollar taxed at 53%. The issue is not investment performance—it is tax concentration.

You may unintentionally worsen this outcome by “doing nothing”: deferring income, allowing RRIF balances to grow, and postponing tax decisions until later in life. What feels prudent year‑by‑year can result in a significantly larger terminal tax bill.

The real puzzle lies in sequencing withdrawals across RRIFs, TFSAs, non‑registered assets, pensions, and—where applicable—corporations. The goal is not to eliminate trade‑offs, but to make them visible and intentional.

This is where The Canadian Retirement Planner’s Software can help. By modeling different income strategies and their lifetime and estate consequences, it allows you to see how today’s decisions shape tomorrow’s legacy.

For legacy‑focused retirees, finishing well means understanding how income decisions echo forward—long before the final return is filed.

The Canadian Retirement Planner’s Software can guide you in assembling the pieces of your retirement puzzle. For more information, visit   https://www.gobeilretire.ca/

David R. Gobeil, MSc, CPA, CA, CFP®