Mixed raced couple calculating financial bills at home
Personal Finance

Maximize tax breaks by equalizing joint retirement incomes, experts say

Here’s how to create a retirement plan that builds more savings for the long run

Mixed raced couple calculating financial bills at homeWhen creating a retirement plan with your partner make sure you account for big life events, such as home ownership and starting a family (Getty Images/Pekic)

No matter where you stand in your financial life, it’s never a bad time to look at your readiness for retirement. 

But planning for those “golden years” with a spouse or common-law partner is naturally more intricate than doing so alone, particularly if you want to use equalizing income strategies that maximize savings and tax breaks.

Here are some tips from CPAs on where to start and the strategies that can help you do so. 


If you’re coming together financially, you will first need to assess each individual’s personal income level, net worth and marginal tax rate to decide what financial planning options make the most sense now that you’re united, says CPA Tony Salgado, president and founder, AMS Wealth Inc. 

“As an adult earning an income and living on your own, the type of decisions you have available to you will differ from when you live with somebody else,” he says. “You need [to know] the ingredients to make the best decision for the family unit.” 

CPA Brian Quinlan of Campbell Lawless LLP, Chartered Professional Accountants agrees, adding that individual assessments will determine how a couple can build a savings strategy moving forward. 

“Look at your personal tax returns and see what jumps out at you. Observe whether the partners or spouses are in different tax brackets,” he says. “That’s what you’re looking for to start planning.” 


As years pass by, situations change including our jobs, careers and subsequently our incomes. 

It’s not enough to make plans based solely on current circumstances, says Salgado. When planning a joint retirement, it’s best to consider future career or income goals, family planning, possible leaves of absence, and so on. 

Planning begins with goal setting that be geared around your stage in life and how old you are, say experts. Your plan will shift and change over the years as you calculate your retirement needs, income and spending as a couple. The earlier you start, the better.

“Once you start saying ‘let’s plan for the future’, people shy away from that conversation” he says. This planning, adds Salgado, includes preparing as much as possible for “significant life events,” including death, marriage, birth, immigration, buying a home—even an adult child relocating to another country.

“It’s like that famous quote, ‘Not planning is planning to fail.’ You have to plan for the future using reasonable parameters and taking variables into account,” he says. 


To break down the complexities of retirement saving, it’s important to review your plan regularly, making sure that it aligns with your changing situation and goals.  Salgado recommends seeking advice from a finance professional. Meet at least once or twice a year, he says, to review and discuss your current situation and longer-term goals, developing (or adjusting) a bigger plan from there.

“That doesn’t mean taking five minutes to look at an investment statement,” he says. “Spend a few hours reviewing your financial planning objectives.”

Salgado recommends taking into account those unexpected scenarios mentioned above when seeking advice. Review and adjust insurance and estate plans, he adds, to react accordingly, as most situations have tax and financial planning implications. 

“Follow up on those [big life] decisions with a review of all of your other financial planning matters, which include insurance and investments and tax planning,” he says. 


There are several government programs that help couples maximize their tax breaks, however they may not be advantageous to everyone. Before pursuing these options, consult with your financial professional, agree experts.   

These programs include: 

  • Spousal RRSP
    If one partner is a high-income earner (and the other is not), it may be advantageous for the higher earner to use some of their RRSP contribution room to contribute to a spousal RRSP for a tax deduction. The recipient partner will pay tax on any funds withdrawn from the RRSP, if conditions are met. This planning must generally be done well in advance of retirement to be effective. 
  • Canada Pension Plan (CPP) and/or Quebec Pension Plan (QPP) sharing
    If one, or both, parties have contributed to CPP or QPP, they can share the pension(s) with each other. To do so, they must be receiving or eligible to receive the pension and be living together. The amount that can be shared is based on the number of months they’ve resided together while contributing to the pensions. For more information on getting the most from CPP and QPP by delaying benefits, refer to this study by FP Canada.
  • Pension income splitting
    Though not ideal for everyone, and requiring expert advice given its complexities, pension income splitting can be advantageous for reducing the amount of tax paid.   
    This program allows one spouse to transfer up to half of an eligible pension income on a spouse’s or common-law partner’s tax return. Eligible pension income includes payments from an employer pension fund, registered retirement savings plan (RRSP) annuity payments or registered retirement income fund (RRIF) payments if over 65 years old or more. Benefits including CPP, OAS, and certain foreign pensions are not eligible.

The advantage of pension splitting is that it’s totally flexible and east to do,” says Quinlan. “Some years you [might] do it and some years you might not.” 


Uniting romantically and monetarily? Look to CPA Canada’s Love and money: Conversations to have before you get married. And if you started saving for retirement, carve out a plan using CPA Canada’s The procrastinator’s guide to retirement: A financial guide to retiring in 10 years or less.