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Best ETFs for Retirement Income in Canada (2026)

Updated

If you are building the broader retirement drawdown plan first, start with retirement income strategies in Canada.

Best Retirement Income ETFs Listed on the TSX

Purpose-Built Retirement ETFs

ETF Ticker MER Target Yield Holdings Distribution Strategy
Vanguard Retirement Income VRIF 0.29% ~4.5% 7 underlying ETFs Monthly Balanced allocation, target 4-5% payout
iShares Core Income Balanced XINC 0.20% ~3.5% 40% equity / 60% fixed income Monthly Conservative income
BMO Monthly Income ZMI 0.25% ~4.0% 60% equity / 40% bonds Monthly Balanced income

Covered Call ETFs (Higher Yield)

For the tradeoff between high payout and capped upside, compare these with our dedicated covered call ETFs Canada guide.

ETF Ticker MER Yield Holdings Distribution Strategy
BMO Covered Call Canadian Banks ZWB 0.72% ~6.5% Big 6 Canadian banks Monthly Banks + covered calls
BMO Covered Call Utilities ZWU 0.72% ~7.0% Canadian/US utilities Monthly Utilities + covered calls
CI WisdomTree US Quality Dividend Growth Variably Hedged DGR 0.38% ~2.0% US dividend growers Monthly Quality + growth
Hamilton Enhanced Canadian Bank HCAL 0.65% ~7.5% Big 6 banks (1.25x leverage) Monthly Leveraged banks + covered calls
Harvest Healthcare Leaders Income HHL 0.45% ~7.5% Global healthcare Monthly Healthcare + covered calls
BMO Covered Call S&P 500 ZWS 0.72% ~5.5% S&P 500 stocks Monthly US large cap + covered calls
Global X Enhanced S&P 500 Covered Call USCC 0.65% ~7.0% S&P 500 Monthly Enhanced premium writing

Dividend / Income ETFs

If you want a simpler income sleeve built around plain dividend funds rather than payout-focused blends, see best dividend ETFs in Canada.

ETF Ticker MER Yield Holdings Distribution Focus
iShares S&P/TSX Canadian Dividend Aristocrats CDZ 0.66% ~4.0% 80+ Monthly Companies with 5+ years of dividend increases
Vanguard FTSE Canadian High Dividend VDY 0.22% ~4.0% 50+ Monthly High-yield Canadian stocks
BMO Canadian Dividend ZDV 0.39% ~4.5% 50+ Monthly Canadian dividend stocks
iShares Core Canadian Universe Bond XBB 0.10% ~3.5% 1,400+ Monthly Broad Canadian bonds
iShares Canadian Real Return Bond XRB 0.38% ~3.0% 10+ Semi-annual Inflation-protected bonds

Retirement Income Portfolio Models

Conservative (Low Risk, Lower Income)

Holding Allocation Yield Role
XBB (Bonds) 40% ~3.5% Stability and income
VDY (Canadian dividends) 25% ~4.0% Canadian dividend income
VRIF (Retirement income) 20% ~4.5% Balanced income
ZAG (Aggregate bonds) 15% ~3.5% Additional stability
Blended yield ~3.8% $19,000/year on $500K

Balanced (Moderate Risk, Moderate Income)

Holding Allocation Yield Role
VRIF (Retirement income) 30% ~4.5% Core balanced income
VDY (Canadian dividends) 25% ~4.0% Canadian dividend income
ZWB (Covered call banks) 15% ~6.5% Enhanced bank income
ZAG (Bonds) 20% ~3.5% Stability
XEF (International) 10% ~3.0% Diversification
Blended yield ~4.3% $21,500/year on $500K

Higher Income (Higher Risk)

Holding Allocation Yield Role
ZWB (Covered call banks) 25% ~6.5% Enhanced bank income
ZWU (Covered call utilities) 20% ~7.0% Enhanced utility income
VDY (Canadian dividends) 20% ~4.0% Dividend income
HHL (Healthcare covered call) 10% ~7.5% Healthcare income
ZAG (Bonds) 15% ~3.5% Stability
XRE (REITs) 10% ~4.5% Real estate income
Blended yield ~5.6% $28,000/year on $500K

RRIF Income Requirements

This section pairs naturally with our RRIF withdrawal rules Canada guide.

Minimum RRIF Withdrawals

Age Minimum % of Portfolio On $500K On $1M
71 5.28% $26,400 $52,800
75 5.82% $29,100 $58,200
80 6.82% $34,100 $68,200
85 8.51% $42,550 $85,100
90 11.92% $59,600 $119,200
94+ 20.00% $100,000 $200,000

RRIF minimums increase each year. Withdrawals are taxed as ordinary income.

How to Meet RRIF Withdrawals with ETF Income

Strategy How It Works
Natural yield ETF distributions cover minimum withdrawal (ideal)
Sell units Sell ETF units to cover shortfall
Blended Partial distributions + partial unit sales
In-kind transfer Transfer ETF units out of RRIF (counts as withdrawal at market value)

Canadian Government Retirement Income

Source Maximum Annual (2026 est.) Start Age Taxable?
CPP ~$16,400 (at 65) 60–70 Yes
OAS ~$8,600 65–70 Yes (clawed back if income >$90K+)
GIS ~$12,500 (if low income) 65 Not taxable
Total max (no GIS) ~$25,000 65 Partially

Sample Retirement Income at 65 ($500K Portfolio)

Source Annual Income Monthly Income
CPP $16,000 $1,333
OAS $8,500 $708
ETF Portfolio (4.5% yield) $22,500 $1,875
Total $47,000 $3,917

Covered Call ETFs — Pros and Cons

Advantage Disadvantage
Higher current income (6–8%) Capped upside in bull markets
Monthly distributions Distributions may include return of capital
Less volatile in flat/down markets Underperform in strongly rising markets
Simple — no options knowledge needed Higher MERs (0.65–0.85%)
Popular for RRIF cash flow May erode capital over long term

Tax-Efficient Retirement Income

Account Withdrawal Order

Order Account Why
1 Non-registered Reduce estate tax burden; capital gains taxed at 50% inclusion
2 RRIF (former RRSP) Mandatory minimums, taxed as income
3 TFSA Tax-free, let it grow as long as possible

Tax-Advantaged Income Types

Income Type Tax Treatment Best Account
Canadian dividends Dividend tax credit (effective ~15% tax) Non-registered
Capital gains 50% inclusion rate Non-registered
Interest income 100% taxable TFSA or RRIF
Return of capital Tax-deferred (reduces ACB) Non-registered
Foreign dividends Fully taxable + withholding RRSP/RRIF

If you want the fixed-income building block behind these portfolios, review best bond ETFs in Canada.

Real estate income can also be a separate sleeve for retirees, which we cover in best REIT ETFs in Canada.

Withdrawal Rate Rules of Thumb

Strategy Annual Withdrawal Risk
4% rule 4% of initial portfolio, adjusted for inflation ~95% success over 30 years (historical)
Variable % Withdraw portfolio yield only Lower income but preserves capital
RRIF minimum Government minimum (5.28%+ from 71) May deplete faster than 4% rule
Guardrails 4% base, adjust ±1% based on market Balances income and preservation