When you retire, you have to decide how to convert your RRSPs, Locked-In RSPs, Locked-In Retirement Accounts (LIRAs), Tax-Free Savings Accounts (TFSAs) and non-registered savings into retirement income.<\/p>\n
The choice isn\u2019t always easy. Some people prefer to keep complete control over their investments, while others seek out a steady and secure guaranteed source of income.<\/p>\n
You are allowed to contribute to and keep your RRSP, Locked-In RSP or LIRA until the end of the year in which you turn 71. After this point, they must be converted into income.<\/strong><\/p>\n Peter, Colleen and Mary are all turning 60 and retiring.<\/p>\n After seeing their advisors, each decides to convert his or her $100,000 RRSP as follows:<\/p>\n Peter, who has always invested independently in order to have complete control over his investments, decides he also wants to\u00a0manage his retirement savings<\/strong>. He converts his RRSP into an RRIF and elects to receive regular income for a period of 20 years.<\/p>\n Colleen wants to\u00a0keep control over a portion of her savings<\/strong>\u00a0to have a bit of flexibility, and receive\u00a0guaranteed regular income for life<\/strong>\u00a0for security. She converts $50,000 of her RRSP into an RRIF and $50,000 into a life annuity with a guarantee period of 15 years. She will receive monthly income of $400 from her RRIF.<\/p>\n Mary wants\u00a0guaranteed regular income<\/strong>\u00a0until age 90. She converts her RRSP into a fixed-term annuity.<\/p>\n Here are the results of the three pensioners\u2019 choices:<\/p>\nWhat would you like to do?<\/h2>\n
\n
Case studies \u2013 Three different strategies<\/h2>\n
\n\n
\n \u00a0<\/strong><\/td>\n Peter<\/strong><\/td>\n Colleen<\/strong><\/td>\n Mary<\/strong><\/td>\n<\/tr>\n \n Retirement income option<\/strong><\/td>\n RRIF
\n20-year period<\/td>\nRRIF
\nPayments of $400\/month<\/td>\nLife annuity with 15-year guarantee<\/td>\n Fixed-term annuity<\/td>\n<\/tr>\n \n Capital invested<\/strong><\/td>\n $100,000<\/td>\n $50,000<\/td>\n $50,000<\/td>\n $100,000<\/td>\n<\/tr>\n \n Monthly income<\/strong><\/td>\n $707\/month for 20 years, after which RRIF will be depleted.<\/td>\n $400\/month for 16 years and one month, after which RRIF will be depleted.<\/td>\n $316\/month for life.<\/td>\n $589\/month for 30 years, up to her 90th birthday.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n