Getting retirement income from your RRSP

You must close your RRSP before the end of the year you turn age 71. You can take your savings in cash. Or you can convert your RRSP into a regular stream of retirement income.

2 income options

1. Convert your RRSP to a RRIF

Your investments will continue to be sheltered from taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition in a RRIFRRIF See Registered Retirement Income Fund.+ read full definition. But you’ll have to take out a minimum amount every year. Learn more about RRIFs.

2. Buy an annuity with your RRSP funds

You can use your RRSP savings to buy an annuity. You can choose an annuity that provides you with a regular stream of income for life, or until age 90. Learn more about annuities.

Another option: Put money in both

Consider putting money in both a RRIF and an annuity. This can make sense if you want to keep some control over your investments and payment options, but also want the security of guaranteed income.

Taking your RRSP as cash

You can also choose to take some or all of your RRSP funds in cash. You may want to do this if you have little other income and you’re in a low tax bracketTax bracket The rate at which you pay tax, based on your income level.+ read full definition. You’ll pay a withholding tax of up to 30% on the money. And you’ll have to declare it as income on your tax return that same year. If you use this money to buy investments in a non-registered accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition, you’ll also pay tax on any earnings.

When it’s time to convert your RRSPRRSP See Registered Retirement Savings Plan.+ read full definition into retirement income, consider speaking with a financial advisor. Your RRSP funds are likely just one part of your overall retirement picture. Learn more about retirement planning.

Key point

You must close your RRSP by the end of the year you turn age 71. You can transfer the money to a RRIF, buy an annuityAnnuity A contract usually sold by life insurance companies that guarantees an income to you or your beneficiary at some time in the future. An annuity is a contract with a life insurance company. When you buy an annuity, you deposit a lump sum of money, and the insurance company agrees to pay you a guaranteed…+ read full definition or take it in cash.

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