Some RRSP income options
Your sources of retirement income
Your pension from the CAAT Plan
RRSPs and your personal savings
Some RRSP income options
Retirement planning
Once you retire, the emphasis shifts from funding your RRSP to managing the retirement income you have accumulated along with your government and CAAT Plan pensions. Those benefits, once you have applied for them, will provide a steady stream of income for the rest of your life. However when it comes to your RRSP, you must decide how to manage your assets to ensure you will have enough to see you through your retirement.
You must stop contributing to your RRSP by the end of the year you turn 69. At that time, funds withdrawn from a non locked-in RRSP can be taken as cash (subject to income tax), used to buy an annuity, or transferred to a Registered Retirement Income Fund. However funds that were transferred out of a registered pension plan into a locked-in RRSP can only be used for retirement income in the form of an annuity, or a transfer to another locked-in vehicle.
Some options are outlined below:
Registered Retirement Income Fund (RRIF)
RRIFs are similar to RRSPs, with the exception that you must withdraw funds from your RRIF on a regular basis. They are used to accept transfers of funds from non locked-in RRSPs and other investment vehicles. You must establish your RRIF by the end of the year in which you turn 69 and you must make a minimum withdrawal to use as retirement income each year. RRIFs are flexible in that you can control your investment, and, as with RRSPs, your earnings and interest accumulate tax-free. In addition, when you start your RRIF, you can decide when and how much to take out as income payments.
Life Income Fund (LIF)
LIFs are similar to RRIFs but with additional restrictions. LIFs only accept transfers of locked-in funds from registered pension plans and locked-in RRSPs. As with RRIFs, there are minimum withdrawal limits, however LIFs also impose maximum limits.
Locked-in Retirement Income Fund (LRIF)
As with LIFs, LRIFs also accept the transfer of locked-in funds from registered pension plans and allow you to invest and grow your savings tax-free. LRIFs also impose minimums and maximums on the amount that you must withdraw yearly. However, LRIFs are meant to provide you with retirement income for life - there is no requirement to purchase an annuity at a specific age.
Annuities
An annuity provides you with guaranteed income either for a specific period of time or for your lifetime. The financial institution, life insurance or trust company that issues your annuity is responsible for your investments and for paying you a stream of income for your retirement. How much you receive depends on the size of annuity you purchase and actuarial factors such as your age, gender and life expectancy. You can choose an annuity that pays you for life, or one that pays you for a specified period of time. Some annuities offer a joint and survivor option that will continue to pay your spouse when you die.
The above list provides a general idea of the options available to you, however it is not meant to be exhaustive. How you manage your retirement income will depend on your individual circumstances. As with all financial decisions, it's a good idea to research the available options and consult an independent investment advisor or financial planner for advice.
Your pension from the CAAT Plan
RRSPs and your personal savings
January 2006
| Contact Us | Disclaimer | Privacy | Archives |
| © CAAT Pension Plan | 1-866-350-CAAT (2228) |
| 2 Queen Street East, Suite 1400, P.O. Box 22 Toronto ON M5C 3G7 |
