How it works
Three things happen when you run a plan.
1. Your tax, year by year
For every year and each person, RetOpt works out the actual tax return: federal and provincial or state tax, the credits that come with age, and the benefits that shrink as income rises. So the tax on your next dollar is not one rate. It jumps around:
- Low-income tax break fading ($19k–$25k)
- Age credit shrinking ($46k–$108k)
- OAS clawback zone ($95k–$155k)
Small steps from the Ontario health premium are smoothed.
- Social Security torpedo ($42k–$78k)
- Senior deduction fading ($75k–$175k)
Every rate and threshold comes from a file that names the government document it was taken from and the tax year it applies to.
2. The choices, worked out together
When to start your pension, which account to draw from first, and when to move money between accounts all affect each other. Starting CPP or Social Security later pays more every year, but means drawing more from your RRSP or IRA in the meantime:
Each year's pension, as a share of what it pays if you start at 65.
Each year's benefit, as a share of what it pays at your full retirement age: 67 if you were born in 1960.
RetOpt works all of these out together, for every year at once. Here is how the Ontario example's accounts are drawn on:
Before you see a plan, it is run through a second, separate calculation of the same tax rules, and every figure on your results page comes from that one.
3. How reliable the answer is
The search has a time limit. When it stops, it tells you whether it proved no better plan exists, or how much better one could possibly be, in dollars.
It assumes your investments earn 2% a year more than inflation, every year, which you can change. It shows how much lower returns could go before your spending stops working, and what a bad decade first would cost against the same decade last. Neither is a probability, and it gives no "chance of success" percentage: that depends on market assumptions someone else chose.
When it will not answer
Where it cannot give you a reliable answer, it tells you so in plain words. It works out the Guaranteed Income Supplement in Canada. It plans a business you run yourself, a corporation you own in Canada, and an S corporation in the United States, including how much to pay yourself from it. It does not yet answer two corporations in one household, self-employment in Quebec, or an American C corporation or partnership. If you retire before 65 in the United States and buy health insurance on the marketplace, the plan includes the premium tax credit, and the page tells you what it assumes about it.
The app enforces these limits in the calculation itself, and shows the ones that apply to you on your results page. The full list is here.
Where do you live?