Registered Retirement Income - The facts

Registered Retirement Income - The facts

Everything you should know about your retirement income options

Canadians must convert their registered retirement savings plans (RRSPs) and locked-in RRSPs into retirement income by the end of the year in which they turn 71 years of age. There are a number of options, which are discussed in this booklet.

Making the right choice is an important life decision. With all the changes that retirement brings, making the best use of RRSP savings is the key to enjoying retirement to its fullest.

When it comes to converting an RRSP into retirement income, there are more options available to Canadians today than ever before. Depending on preferences and goals, your clients can choose just one option or a combination. Some of today’s options are flexible, so if financial needs change, your clients can select new options that best meet those changing needs.

This booklet reviews the available retirement income options:

  • Registered retirement income fund (RRIF) – like an RRSP but instead of making contributions, you receive income. There’s a required annual minimum payment and no maximum. Payments are taxable and can be split between spouses/common-law partners starting at age 65.
  • Life income fund (LIF)/Locked-in retirement income fund (LRIF) – like an RRIF but there’s a required annual minimum payment and a maximum payment restriction. Payments are taxable and can be split between spouses/common-law partners starting at age 65.
  • Prescribed retirement income fund (PRIF) – like an RRIF, but funded by money from locked-in RRSP accounts. There’s a required annual minimum payment, but unlike an LIF, there’s no maximum payment restriction. Payments are taxable and can be split between spouses/common-law partners starting at age 65.
  • Restricted life income fund (RLIF) – like an RRIF but funded by money from locked-in RRSP accounts governed by federal pension legislation only. There’s a required annual minimum payment and a maximum payment restriction. Payments are taxable and can be split between spouses/common-law partners starting at age 65.
  • Annuity – can provide guaranteed regular income for the rest of your client’s life or for a specified number of years. Registered annuities (funded by RRSPs, RRIFs, and their locked-in account equivalents) are fully taxable income and can be split between spouses/common-law partners starting at age 65.

Share this guide with your clients and discuss the options. Each option is fully explained, including the benefits and drawbacks of each, allowing your clients to make an informed decision that works best for their lifestyles and retirement goals.

Help your clients make the choice

Canadians have been allowed to save for retirement on a registered (tax-sheltered) basis for many years and many accumulate a substantial sum of money.

Turning an RRSP into retirement income is a major financial decision. Work with your clients to consider their long-term goals and all sources of future income — including pension money and non-registered sources. Their RRSP money can be used to make sure they have a comfortable, enjoyable retirement.

Tax, Retirement & Estate Planning Services Team

Tax, Retirement & Estate Planning Services Team

Manulife Investment Management

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