||registered retirement income funds (RRIF's)
What is an RRIF?
A RRIF is established by a financial institution to provide retirement income to an individual. A RRIF is
set up by directly transferring money from registered retirement savings plans or registered pension plans. Each year
the RRIF holder must withdraw a set portion of the money in the fund and pay tax on it.
RRIFs are the most popular option for converting RRSPs. That's because a RRIF is like a continuation of your
RRSP. Your funds remain tax sheltered, and you continue to choose how your funds are invested. But instead of putting
money into a RRSP, the RRIF is designed to pay money out as income for you to live on.
Advantages of the RRIF:
||Control - A RRIF allows you to retain control over your investment.
||Investment Flexibility - RRIF's allow you to hold a wide range of investment products including - mutual
funds, stocks, bonds, GIC's, T-Bills... You also have complete control over your investments' foreign content as
well. These elements of diversification, both among investments and geographic distribution, help to prevent the
erosion of your capital during retirement.
||Withdrawal Flexibility - The only thing you have to worry about is withdrawing your minimum amount every
year. The decisions of when the money comes out (annually, semi-annually, monthly), and where it comes from (which
investment the money will come from) are left entirely up to you. You may even choose a lump sum withdrawal any time
during the life of the plan.
||Fight inflation - You can earn higher returns through your RRIF, because you control how your funds are
invested. And higher returns help you fight inflation by protecting the purchasing power of your money.
||Leaving an estate - A RRIF is also a good choice if you want to leave an inheritance for your
children. Since you only have to take a minimum amount out of your RRIF each year, you can still leave a substantial
amount to your beneficiaries when you die.
RRSP's must be wound-down (closed) by the end of the year in which you turn 71 years of age, but you can actually
convert your RRSP to a RRIF any time before you turn 71. Once your RRIF is established, you must withdraw a minimum
amount every year, after the first year. This amount is based upon two elements - when the RRIF was established, and
your age when you begin withdrawing the funds.
RRIF Investing with an Advisor
Please contact Peter McNally, Certified Financial Planner at McNally Financial and Insurance Group to find out which retirement income strategy is right for you.