10.3.6 Unsheltered savings plans

Most financial experts recommend putting as much savings as you can into tax-sheltered investments. Once you have reached your contribution limits on sheltered plans, you can still invest for your future with unsheltered savings and investments.

An unsheltered investment is a regular investment or account that does not shelter your money from tax. In other words, you have to pay tax on your savings and the money you make investing them.

You can choose from a wide range of investments and savings vehicles. Some, like government savings bonds and guaranteed investment certificates (GICs), are fixed-income investments with a set interest rate. Others, like stocks, pay income in the form of dividends and capital gains, and do not have a guaranteed rate of return.

Tips for investing for retirement

Refer to the Investing module for more information about investing your money.


An annuity is an investment that pays you a set monthly income for a set period of time. It works like life insurance in reverse. With life insurance, you pay a certain amount each month over many years so your loved ones will get a lump sum when you die. With an annuity, you pay a lump sum up front, and get income back each month over many years. The size of your monthly payment will be higher if you buy the annuity when interest rates are high.

There are two main types of annuities:

To find out more about annuities, check out the information from the Ontario Securities Commission GetSmarterAboutMoney.ca website or the L'Autorité des marchés financiers website.

Income from pensions

You must start receiving income from your pension plans by the end of the year you turn 71. This rule applies to all of your pensions, if you have more than one. Don’t forget about any pension you may have from a job you left years before.

Most people start using their pension as soon as they retire. How they create income depends on the type of pension plan and the plan rules.

Locked-in retirement account

If, before retirement, you leave a company with a pension plan and can take your pension savings with you, you will set up a locked-in retirement account (LIRA). This is an account that holds money moved out of a pension plan. It works like an RRSP, but you cannot withdraw the funds until you retire.

By age 71, you must close a Locked-in Retirement Account (LIRA). Then you can:

Make sure you understand your options and how they will affect the money you get. You may want to talk to a financial professional to help you sort out the best choices. (See the section titled Professional advice for retirement planning.)

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