Banner for independent advisor associated with Canada Life

Converting an RRSP into a RRIF

If you’re like many Canadians, retirement is an important accomplishment: a transition to spending more time however you want. As you approach the end of your working years, it’s important to look into options that can maximize your savings and make them last.

If you’re retired, or are nearing retirement, a Registered Retirement Income Fund (RRIF) should be on your radar. Let us fill you in on some things you should know about RRIFs.

So, how does a RRIF work?

Basically, it’s a Registered Retirement Savings Plan (RRSP) in reverse. Where an RRSP helps you save for retirement through annual contributions, a RRIF does the opposite. It requires you to make annual withdrawals from your savings to help fund your retirement. A RRIF gives you several choices when it comes to investing your money. You can hold different investments – such as mutual funds, segregated funds, Guaranteed Interest Options (GIO), Exchange Traded Funds (ETF), etc.

If there is money left in your RRIF when you die, it goes to the beneficiaries you’ve named in the application for the RRIF as part of your estate planning. In bankruptcy, you get the same creditor protection for funds in a RRIF as you would in an RRSP.

A RRIF’s flexibility has certain responsibilities. The more income you take out in the short term, the less money you’ll have left in the long term.

Read the original article here - Opens in a new window