Important RRIF Options to Consider for Retirement Planning

What is a RRIF and How Does it Work

For many Canadians, the RRSP (Registered Retirement Savings Plan) is the primary driver of their retirement savings.

An RRSP allows you to contribute a percentage of your income each year which, unlike non-registered accounts, can grow in that account while deferring taxes until you withdraw. Later, when you stop working or reach age 71, you convert your RRSP to a RRIF (Registered Retirement Income Fund) and flip the switch from contributions to withdrawals.

A RRIF is a federally registered account that provides you with a steady stream of income that you can continue to draw on during retirement. It is essentially a continuation of your RRSP and functions in much the same way, however, you can only make withdrawals and can no longer make deposits with a RRIF.

In this episode, Marcelo and Lawrence talk about the main benefits of RRSPs and RRIFs, what you need to know about converting your RRSP to a RRIF, cash flow and tax considerations when drawing down from a RRIF in retirement, estate considerations for your RRIF, and so much more.

RRSPs vs RRIFs and RRIF withdrawal rules

• Understanding your RRSP (2:16)
• Three main benefits of an RRSP (3:23)
• The relationship between an RRSP and a RRIF (4:46)
• Differentiating between an RRSP and a RRIF;  LIRAs and LIFs (6:41)
• What you need to know about RRIF withdrawal rules (8:08)
• Cash flow considerations for your RRIF payments (10:24)
• Reducing your tax obligation by basing your minimum RRIF payment on your younger spouse’s age (12:51)
• Applying withholding tax to RRIF payments for better cash flow management (14:23)
• Critical factors to think about when planning how to convert your RRIF (16:46)
• The significant impact that strategic planning can have on your estate value (18:02)
• How you can optimize your RRIF strategy if you’re still working at age 71 (23:56)
• Why you should designate a beneficiary in your RRIF (25:54)
• Final thoughts and key takeaways (27:09)
• And much more!