The Canadian federal government has proposed a significant change to the country’s retirement savings system in Budget 2026, allowing seniors to keep their Registered Retirement Savings Plans (RRSPs) beyond the age of 71.
The proposed measure is expected to help thousands of older Canadians simplify their financial and tax planning each year by removing an existing requirement to close or convert their RRSP accounts when they reach the age of 71.
An RRSP is a tax-advantaged savings account that allows Canadians to deduct eligible contributions from their taxable income. Investment earnings within the account are generally tax-deferred until withdrawals are made during retirement. Eligible investments include cash, stocks, Guaranteed Investment Certificates (GICs) and Exchange-Traded Funds (ETFs).
What Would Change Under the Proposed Rules?
Under the current rules, Canadians must close their RRSP by December 31 of the year they turn 71. They are required to withdraw the funds, purchase an annuity or transfer the balance into a Registered Retirement Income Fund (RRIF).
The government’s new proposal would remove this age-based requirement, allowing individuals to maintain their RRSP accounts throughout their lifetime.
Another important feature of the proposal concerns inheritance and estate planning. Following an account holder’s death, their spouse or common-law partner would be able to become the successor account holder, potentially simplifying the transfer of retirement savings and related administrative procedures.
Minimum Withdrawals Would Begin at Age 72
Although seniors would be allowed to keep their RRSP accounts open, the proposed system would require account holders to withdraw a minimum portion of their savings annually beginning at age 72.
The minimum withdrawal rate would be determined with reference to life expectancy, ensuring that retirement savings are gradually withdrawn and the applicable taxes are paid.
John Fragos, press secretary to Finance Minister François-Philippe Champagne, has confirmed that under the proposed arrangement, individuals would not be permitted to make additional contributions to their RRSPs after reaching the age of 71.
Experts Highlight Financial and Administrative Benefits
Jamie Golombek, Managing Director of Tax and Estate Planning at CIBC Private Wealth Management, said that many Canadians currently convert their RRSPs into RRIFs at age 71 to avoid additional tax complications.
However, the conversion process creates administrative challenges for millions of Canadians each year.
Financial experts believe the proposed changes could make retirement planning more straightforward and give seniors greater flexibility in managing their savings.
Nevertheless, the reform would not directly address broader financial pressures facing older Canadians, including inflation, rising housing costs and the increasing price of everyday necessities.
Public Consultation Begins on November 5
The federal government launched a public consultation on the proposal on November 5, 2026. The consultation will remain open until January 8, 2027.
Canadians, financial experts and other interested stakeholders are being invited to submit their views and recommendations before the government finalizes the proposed changes.
RRSP Contribution Limit for the 2026 Tax Year
For the 2026 tax year, Canadians can contribute up to 18 per cent of their 2025 earned income, subject to a maximum limit of $33,810.
However, pension adjustments related to workplace retirement plans may reduce an individual’s available RRSP contribution room.
The proposed reform could represent an important change in retirement planning for older Canadians, particularly those seeking greater flexibility in managing their savings, investments and estate arrangements.
