As you save for retirement through your working years, you’ll likely make tax-deductible contributions to an RRSP. When you stop working and earning income, however, you can no longer make RRSP contributions. Further, by the end of the year that you turn 71, you’ll need to close out your RRSP and decide what to do with the funds. If you withdraw all your RRSP savings at once, you’ll face a heavy tax burden.

This is where the Registered Retirement Income Fund (RRIF) comes in. A RRIF is a tax-sheltered account that pays you a steady stream of income in retirement. It’s like an RRSP, but instead of putting money into it, you take money out of it. You can convert your RRSP savings to a RRIF whenever you choose, provided it’s no later than the end of the year that you turn 71.

Each year you’re required to withdraw a minimum dollar amount from your RRIF. This amount depends upon your age and the plan value at the beginning of the year. The minimum is calculated as a percentage that steadily increases as you get older.

For example, at age 69, you’ll have to take a minimum of 4.76% from your RRIF annually. By the age of 72, that amount goes up to 5.4%, and by the age of 80, the amount is 6.82%.

What is a RRIF and how do you use it?
4 tips for working after retirement
Government of Canada; receiving income from a RRIF

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