10.3.5 Registered Retirement Income Fund

From: Financial Consumer Agency of Canada

How it works

A Registered Retirement Income Fund (RRIF) works like an Registered Retirement Savings Plan (RRSP) in reverse. Before, you were putting money into your RRSP as savings. After you retire, you withdraw money from your RRIF for income. Once a RRIF is established, there can be no more contributions made to the plan, nor can the plan be terminated except through death.

As with an RRSP, you choose the types of investments to hold in an RRIF.

You don't pay tax on any of the money in your RRIF, as long as it stays in the plan. This includes any money you make from investing. You do pay tax when you take money out of your RRIF for income. If there is any money left in your RRIF when you die, it will go to loved ones or to your estate.

You must withdraw a minimum amount from your RRIF each year, but there is no maximum amount you can take out each year. Your RRIF carrier calculates the minimum amount based on your age at the beginning of each year. You decide how often you would like to receive your payments, and how much (beyond the minimum) you want to withdraw.

Getting income from your RRIF

If you're like many people, you may try to invest the funds in your RRIF so that the returns replace all or part of what you withdraw each year. You decide what mix of investments makes the most sense for you, based on the different risks and potential growth each one offers. It's generally advisable to invest in low-risk products because you don't have as much time to recover from losses as you did before retirement.

This chart shows what income you may get from an RRIF. Assume that:

  • at age 71, you transfer $100,000 from your RRSP
  • the RRIF earns five percent each year
  • you take out only the minimum withdrawal each year
  • inflation is not taken into consideration.

Year

Age

Minimum RRIF withdrawal (percent)

Minimum RRIF withdrawal (dollars)

Total amount left in the RRIF at the start of each year

2018

74

5.67%

$ 5,602

$ 98,133

2023

79

6.58%

$ 6,182

$ 92,467

2028

84

8.08%

$ 6,822

$ 81,828

2033

89

10.99%

$ 7,538

$ 64,478

2039

95

20.00%

$ 7,635

$ 32,447

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