Conexus - Registered Retirement Income Fund (RRIF)

What is it?

A Registered Retirement Income Fund (RRIF) is a tax-deferred retirement account in Canada. You convert your RRSP or other retirement savings to a RRIF by the end of the year you turn 71, or sooner. It’s designed to provide you with a regular stream of income during your retirement years. You withdraw money from your RRIF, and these withdrawals are taxable. The tax is calculated based on the annual income received from the RRIF. Generally, the higher the income, the higher your tax bracket will be.

What can I use it for?

RRIFs are designed to convert your savings into monthly income payments, providing a steady stream of retirement income during your retirement years. You can use the funds from your RRIF for various purposes related to your financial needs and lifestyle, including covering living expenses, travel, healthcare, home renovations, and emergency expenses. It’s important to note that while RRIFs offer flexibility in how you can use the income, there are minimum withdrawal requirements imposed by the government to ensure that you gradually deplete your RRIF over your lifetime. Consulting with a financial advisor can help you make informed decisions about how to use your RRIF funds effectively.

To open a RRIF, you must be Canadian resident and have funds in an RRSP or other eligible retirement savings plan. RRIFs require you to withdraw a minimum amount each year, starting the year after you open the RRIF. This amount is calculated based on your age and the total value of your RRIF at the beginning of the year.

Much like other investment vehicles, you have control over your investments. You can hold a variety of products, including mutual funds, GICs, stocks, bonds, and more.

While you must withdraw at least the minimum required amount, you have the flexibility to withdraw more if needed. And in the event of your passing, you can designate beneficiaries for your RRIF. This will allow you to pass on the remaining funds either as a lump sum or through ongoing payments.

✔ Right for you if you:

You want to continue investing and growing. Since you’re not required to withdraw all your funds immediately, you can leave a significant portion of your savings invested, allowing it to continue to grow. This is particularly beneficial if you anticipate a long retirement!
Keeping your money in a tax-sheltered investment is ideal. Your funds held with the RRIF grow tax-deferred, meaning you don’t pay taxes on the investment gains or income generated by the assets held in the RRIF until you withdraw them. This can help you compound your investments more quickly over time.
You want to pay less on your taxes each year. When you make withdrawals from your RRIF, they are taxed as ordinary income, but since you’re retired you may be in a lower tax bracket than during your working years. This results in lower taxes on your RRIF income.

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May not be right for you if you:

There is tax to be considered. RRIF withdrawals are taxable income, meaning they can impact your overall tax situation. If you have other sources of retirement income that already place you in a higher tax bracket, additional RRIF withdrawals could increase your tax liability.
You need liquidity and flexibility. RRIFs have mandatory minimum withdrawals, which may not align with your income needs or financial goals. If this is the case, consider other investment options like a TFSA.

Mutual funds

An investment vehicle that pools money from multiple investors to buy a diversified portfolio of stocks, bonds, and other securities. Their key benefits include diversification and accessibility to a wide range of investment options, making it a convenient way for you to participate in the financial markets with reduced risk and expertise on your side from Conexus.

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ETFs

Exchange-Traded Funds are investment funds that are traded on stock exchanges, much like individual stocks. Similar to a mutual fund, ETFs offer diversification as a benefit but with the added flexibility to trade throughout the day at market prices.

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So much more to explore

At Conexus, we have a range of investment products designed to help you achieve your financial goals. Our diverse portfolio includes stocks, bonds, GICs, and more, each tailored to suit your risk tolerance and investment objectives.

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Disclaimer

Mutual funds, other securities and securities related financial planning services are offered through Aviso Wealth, a division of Aviso Financial Inc. Online brokerage services are offered through Qtrade Direct Investing, a division of Aviso Financial Inc. Qtrade and Qtrade Direct Investing are trade names and/or trademarks of Aviso Wealth Inc. and its subsidiaries.

The information on this page is provided as a general source of information and shouldn’t be considered personal investment advice or a solicitation to buy or sell any mutual funds or other securities. When in doubt, it’s always a good idea to consult with a financial advisor for personalized information and guidance.

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Registered Retirement Income Fund (RRIF)

Why use a RRIF?

How does it work?

RRIF by the numbers

Is this right for you?

Products for an RRIF

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