Converting your savings to income
You’ve spent years saving your money for retirement, but before you retire you need to select the best way to convert your savings into an income.
3 ways to get income in retirement
- RRIF – Like an RRSP, your savings grow tax-free while they’re in the plan and you choose your investments. But you have to withdraw a minimum amount each year, which is fully taxable. Learn more about RRIFs.
Setting up a RRIF
- Annuity – Lets you convert your savings into a guaranteed monthly income. No matter what the markets do, your income will never change. You can choose a term-certain annuity (monthly payments for a set number of years) or a life annuity (with monthly payments until you die). But if you buy a life annuity, any money left over when you die won’t go to your estate. Learn more about annuities.
- Investments outside a registered plan – A variety of investments can produce regular income, such as GICs and bonds that pay interest, and stocks that pay dividends. Learn more about investing for income. Any money you make from “unsheltered” investments is taxable. Learn more about how investments are taxed.
Income splitting to reduce tax
Consider splitting your pension income with your spouse and help reduce the tax you pay. You might be able to share up to half of your pension income with your spouse or common-law partner each tax year. Learn more about income splitting.