Remember that the government only represents about 30% of our retirement income, the company retirement pension plan offers another 30 % and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. Now you reach the year of RRSP conversion year, you are facing the choice to choose either to convert your registered retirement saving plan to RRIF or annuity. In this article, we will discuss the advantage and disadvantage of RRIF and annuity.
I. If you qualify for the following sources of retirement income, you would be wise to consider an RRIF:
1.Old Age Security (OAS).
2.Canada Pension Plan (CPP).
3. A company pension plan.
4. Other non-registered assets.
You would be wise to convert some of your RRSP into RRIF because you will be better able to afford the flexibility and control for tax-and estate-planning purposes that a RRIF allows because your monthly incomes are guaranteed by 4 sources above.
You may consider staggering maturity so portion of your investment in RRIF will generates the necessary cash flow for withdrawals such as buy GICs or bonds so that 20% of the total matures every year.
In RRIF, you are allowed to invest up to 100% of your investment funds in global investments, thereby increasing your investment’s long-term growth and protection? You also protect your investments against any future declines in the value of our Canadian dollar. Besides, it is far more risky to leave all your money in any single country.
Be sure to consult with professional or independent adviser to assist you in building your investment plan and review your plan at least once each year.
II. If you don’t qualify for four of the retirement income sources
You might want to use at least some RRSP funds to buy an annuity as a foundation for your retirement income plan. This provides guaranteed income to cover your minimum retirement income needs.
I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:
Kyle J. Norton