It’s a Pivotal Time?

There are some financial decisions to consider when you turn 65 and 71—a financial planner can help remove the guesswork.

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Taking Income from My RRSP

A financial planner can help you understand the choices for your RRSP and what’s best for you.

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3 Options to Consider

1.Transfer to a RRIF

A Registered Retirement Income Fund (RRIF) is an extension of your Registered Retirement Savings Plan (RRSP). But instead of contributing to it, you’re withdrawing from it to receive an ongoing flow of income.

  • You don’t pay tax on any funds until you withdraw them as income
  • You can stay invested in a variety of investments
  • You’re required to take a minimum annual payment once you convert your RRSP
Bottom Line: The RRIF option offers great flexibility, giving you control of the management of your assets, an annual income you can customize for your needs, and the potential to minimize taxes.
2.Buy an Annuity

An annuity is a contract between you and an insurance company. Annuities provide a guaranteed income stream for life, or a fixed term that you set.

  • You can choose to use all or a portion of your RRSP to purchase an annuity
  • You can choose between many types of annuities available
  • The amount of annuity income you receive will depend on the type you choose, your age, gender, health, amount invested, and the interest rates when you purchased it
  • When you buy an annuity, you’re locking in current interest rates for the entire term
Bottom Line: Annuities provide guaranteed income for life—or a term that you choose—offering security and ease of income management. On the other hand, you’re giving up flexibility in that the funds you use to buy the annuity are no longer accessible other than through the income you receive.
3.Cash Out Your RRSP and Receive a Lump Sum

If you cash out your RRSP and take a lump sum, you will be hit with potentially significant tax consequences, since you will be taxed all at once at your current marginal tax rate. Lump sum payments generally make sense only if the RRSP is relatively small.

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RBC Financial Planning is a business name used by Royal Mutual Funds Inc. (RMFI). Financial planning services and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.