When you retire, you switch from an “accumulation” phase to a “decumulation” phase. The amounts saved now must be used to provide you the income needed to live a comfortable retirement life. That is the time to make certain decisions about the sources of retirement income available to you.
As per experts to maintain your standard of living at retirement time, your retirement income will have to be on average about 50% to 70% of your annual gross income for the last three working years. Or you can add up all the current expenses on a sheet and calculate how much you will need for a comfortable retirement.
Sources of Income at retirement:
Canada Pension Plan (CPP)
Old Age Security (OAS)
Defined Pension Plan
Defined Contribution Pension Plan
Registered savings (TFSA, RRSP, LIRA, RLSP)
Retirement Income Options:
RRIF (Registered Retirement Income Fund)
You must transfer the amounts from your RRSP to an RRIF by Dec 31 of the year you turn 71. Within an RRIF your amount grows tax-sheltered and we can structure RRIF to generate a stream of income in retirement.
LIF (Life Income Fund) and RLIF (Restricted Life Income Fund)
You must transfer your DC RPP, your SPP, your PRPP, your VRSP (employer contributions), your locked-in RRSP, or your LIRA to a LIF or an RLIF by December 31 of the year you turn 71. LIF is related the same to LIRA, as RRIF to RRSP. Investments under LIF also grow tax-sheltered and we can structure LIF to produce retirement income stream within min and max withdrawal limits as per regulations.
TFSA (Tax-Free Savings Account)
TFSA is a kind of saving vehicle that allows you to make contributions each year and allowing the investment growth to accumulate and be withdrawn tax-free. With proper planning, TFSA can be used efficiently to generate retirement income without paying any tax.
As an advisor, we can help you to get the most out of your retirement savings
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