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To achieve the best results, planning for retirement should begin long before you have to convert from RRSPs to RRIFs. Naturally, your planning will continue to evolve in the years after the switch has been made. This calendar provides an effective timeframe to show the steps you may be taking along the way.
| Age |
Recommended action |
| 50 - 55 |
Save, save, save. The final 10 to 15 years of employment should represent your "maximum contribution" years.
Equalize income with your spouse. Two moderate retirement income streams will attract less tax than one large one. Take steps now to build up the lower-income spouse's retirement fund, such as contributing to a spousal RRSP.
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| 55 - 60 |
Revise and review. Review your retirement goals with the input of a professional financial advisor. If you don't have a plan, make one.
Consider professional management. This will cost a little more than doing it yourself, but will save time and effort, and perhaps result in higher returns.
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| 60 - retirement |
Consolidate RRSPs. Some people have more than one RRSP. If you have more than one RRIF, you'll have to make the minimum annual withdrawal from each of them, which is harder to manage. Now may be the time to consolidate your RRSPs into a single plan.
Adjust your portfolio. You RRIF must generate cash flow for your withdrawals, but it must also grow. After all, people are living a lot longer these days.
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Conversion year
(Age 69) |
Convert in good time. Waiting until the very end of the year might not leave you the time you need to make decisions.
Hold off on withdrawals. You do not have to take the first payment from a RRIF until the end of the calendar year after it was set up. (i.e. if you set up your RRIF in 2001, you don't have to take the first payment until the end of 2002) Delaying the withdrawal provides your capital with maximum tax-sheltered growth and defers tax payments.
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Top up your RRSP. Make your final year's RRSP contribution as large as the rules will allow. Warning: You do not have until March 1 of the following year as usual. In your conversion year, your RRSP contribution deadline is Dec. 31. This is also your last chance to make up any deduction room carried forward from previous years.
Use age of younger spouse. The minimum annual withdrawals can be based on your spouse's age if he or she is younger. Choosing the younger age reduces the required minimum annual withdrawal.
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| 70 plus |
Keep withdrawals down. If you need money, consider using non-registered funds first wherever possible.
Don't forget growth. Now that people are living 20 to 30 years into retirement, you need growth elements (conservative equity investments, low risk equity funds) in your portfolio to ensure that you don't outlive your capital. Maintain a diversified portfolio, and review your asset mix annually.
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| 80 plus |
Consider an annuity. At some point in the future, usually when RRIF holders are in their 80s, the value of their RRIF begins to decline. Before that occurs, it may make sense to buy a life annuity with some or all of the remaining RRIF funds.
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