|As you near retirement age, the years of diligently contributing to RRSPs are about to pay off. Understanding Registered Retirement Income Funds (RRIFs) becomes crucial, especially if you have registered retirement savings or pension plans.
What exactly is a RRIF?
Unlike a Registered Retirement Savings Plan (RRSP), which serves as a retirement savings account where you contribute money, a RRIF allows you to take out a certain amount each year once you reach a certain age.
Now, let’s explore how a RRIF works.
When you turn 71, the money you’ve saved and invested in your RRSP accounts must be moved into a RRIF, an annuity, or withdrawn as a lump sum. If your spouse is younger, you can delay this until their 71st birthday.
So, what’s the advantage to convert to a RRIF?
A RRIF acts as a tax-deferred retirement income fund, which means any interest or earnings generated within the account won’t be taxed until you withdraw them. However, when you take money out of your RRIF, it becomes taxable income. Each year, you must withdraw a minimum amount from the RRIF.
If you need funds before reaching 71, you can convert your RRSP into a RRIF and start withdrawing money immediately. However, there are some important tax considerations to be aware of:
What if I don’t have enough in my RRIF to generate sufficient retirement income or if I outlive my RRIF?: The CHIP Reverse Mortgage is an Excellent Option
The CHIP Reverse Mortgage allows you to access tax-free cash from the equity you’ve accumulated in your home. Using this money as retirement income allows you to preserve your investments for an extended period while enjoying an improved cash flow. Also, there are no monthly mortgage payments with the CHIP Reverse Mortgage, helping you increase your monthly cash flow even more.
At Mortgage Man DLC, we offer a CHIP Reverse Mortgage by HomeEquity Bank. Contact our licensed mortgage agents to assist you with obtaining a CHIP Reverse Mortgage today.
Source: Our House Dominion Lending Centres https://dominionlending.ca/sponsored/using-the-chip-reverse-mortgage-to-supplement-your-rrif