Transferring your retirement savings to income

If you’re like many Canadians, you’ve been saving for retirement for years, and a portion of that savings is likely in a Registered Retirement Savings Plan (RRSP). Now it’s time to think about generating some retirement income. By the end of the year in which you turn 71, you’ll have to transfer your RRSP savings to a Registered Retirement Income Fund (RRIF), an annuity or withdraw in cash as a lump-sum payment.

Transferring to a RRIF

A RRIF is a bit like an RRSP in reverse. While you’re saving money for retirement, you make tax-deductible contributions to your RRSP. When you enter retirement, you receive taxable income withdrawals from a RRIF. In other words, you take the money that you’ve saved in your RRSP and transfer it to your RRIF to fund your retirement. You can also choose how much you want to withdraw every year, subject to certain minimums set by the Government of Canada.

Your investment earnings are tax-sheltered until you withdraw them from your RRIF.

Purchasing an annuity

Instead of transferring your savings to a RRIF, you could choose to purchase an annuity, which is an insurance contract that gives you a fixed sum of money every year. Annuities can be a good option for some investors, but keep in mind that once you buy one, your payment amounts and other terms are set. You won’t be able to make any changes for any reason.

Cash withdrawal

You could also cash in your RRSPs for a lump-sum payment. Most investors don’t choose this option because it means taking a significant tax hit when you retire.

Deciding what to do with your RRSP once you need to generate retirement income can be difficult. You should consult with your financial advisor, who will help you make the right choice based on your unique circumstances and help transfer the investments held in your RRSP account into a new income-generating account.

To learn more about winding down your RRSP, talk to your financial advisor or visit

The contents are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.

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