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Stress-Free Retirement

March 28, 2023

You’re heading towards the next stage of life where you’re worrying less about your career and more about your future. You’ve been a diligent saver, regularly contributing to your RRSP and amassed a sizable nest egg for retirement. Now it’s time to turn on the tap and start to draw down your savings in a way that results in the least amount of taxation?

That’s where a RRIF (Registered Retirement Income Fund) comes in handy. A RRIF’s purpose is to draw down your savings in a tax efficient manner instead of accumulating them.

With a RRIF, you spread your income tax payable over your retirement years instead of paying it all up front. On top of that, you don’t pay income tax on what’s left in your RRIF until you access those funds.

How To Open A RRIF?

By contacting us! We’d be happy to help you convert your retirement funds to a vehicle that most benefits you. The benefit of discussing the options with us is we can also help invest some of your RRIF money so that it continues to grow.

What Are the Timeline Restrictions?

The good news is you can open a RRIF at any time; the bad news is you only have until December 31st in the year you turn 71 to do so.

What Can I Put In My RRIF?

You have options with the financial investments you can hold: segregated or mutual funds, savings, GICs, stocks and bonds. One thing to know is there are minimum annual withdrawals starting as soon as you establish a RRIF. According to the Government of Canada, “the payout period under your RRIF is for your entire life. Your carrier calculates the minimum amount based on your age at the beginning of each year. However, you can elect to have the payment based on your spouse or common-law partner’s age. You can withdraw more, but not less than the minimum.”.

How Do I Withdraw?

When withdrawing from a RRIF, you have control, up to a point, of how much income tax you pay; however, you must withdraw a minimum amount each year. This minimum withdrawal amount increases as you age. You also can’t contribute to your RRIF. The money you draw counts towards your income which could affect some government supplements like OAS and GIS.

It’s important to understand your options for accessing the money you worked so hard to save in the way that benefits you the most. Our team can review your options and help you come up with a plan. Book a time to discuss – don’t delay.

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