Advertisement
Most transfer their assets into a RRIF at 71 for regular monthly payments.
You can leave your investments inside your RRSP until you’re 71, regardless of whether you’re working or not. But at age 71, you have to wind up your RRSP and start taking the money out. If you took all the money out at once and claimed it as income, you’d get a massive tax bill that year, so most people transfer their assets into a Registered Retirement Income Fund, or RRIF, so they can convert them into a regular monthly retirement income.
You don’t have to liquidate your investments to convert your RRSP to an RRIF. You just sign a document and change the name of the account. What really changes is the rules: You can’t put any more money in, and you are forced to start taking money out. Your financial institution will send you a notice telling you the minimum amount you need to take out each year. Typically, at age 71 you have to take out around 7%, and that amount gradually increases to 20% by age 94.
Most people decide to change the composition of their investments when they retire, as income and safety are now priorities, rather than growth. This can mean adding an annuity, which guarantees a set monthly payment for a set period of time (often for life). Unfortunately, rates are very low right now, so annuities aren’t a great buy. Other options include bonds, dividend-paying stocks and even income trusts.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Practical advice on how to build your retirement savings for employees at mid-career, the self-employed, single parents and more.
The Trump effect and Trumponomics, Shopify’s huge earnings beat, it’s sunny days for Suncor shareholders and more.
Here’s how to get your free ticket to attend two MoneyShow virtual expos.
You started investing in your 20s, and you feel pretty good about doing it. But now what? Consider impact...
Here are the best accounts to hold your savings and investments.
Want an idea of how much tax you paid—or will be paying—for 2024? Here are the federal and provincial...
The U.S. election made the market go up—for now. Is volatility keeping you up at night? Here are some...
Apple and Nvidia vie for global market cap crown; Google, Microsoft and Meta crush earnings; Amazon’s Bezos takes WaPo...
While not guaranteed like an annuity, MyRetirementIncome is a flexible and simple financial product for those needing to convert...
