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 The
Money Management Newsletter: Retirement
Income Planning
New age RRIFs
By Rob Whipp
As most readers are aware, anyone with RRSPs must convert
them to either a RRIF
or an annuity
before the end of the year in which they turn 69.
Since RRIFs are by far the more popular post RRSP vehicle because of their
flexibility, the following commentary will deal only with the RRIF option.
With a RRIF you can select any amount that you wish to withdraw each year,
subject to a minimum amount which is determined by your age and the balance
of your RRIF.
What follows is a brief explanation and chart. Although the RRIF minimum
age is 69, the chart starts at age 65 in the event that someone wants
to invest in a RRIF early or use a younger spouse's age to calculate their
minimum payment.
When using the chart, "age" is what your age will be at the
end of any given year. If you only want minimum payments from your RRIF
you can use either your age or that of your spouse if he/she is younger
than you. The lower the age used in the calculation, the lower the minimum
payment will be.
The corresponding percentage for each age is calculated on the balance
of your RRIF at the end of the year and is the minimum percentage
that you would have to withdraw during the following year. For example,
if you convert to a RRIF sometime during the year you turn 69, you must
withdraw 4.76% of your RRIF before the end of the following year. The
4.76% is calculated on your RRIF balance at the end of the year you turn
69. If you are 72 at the end of the year, 7.48% of your year-end RRIF
balance must be withdrawn by the end of the next year. If you have RRIFs
with several different institutions, each institution will calculate a
separate minimum payment.
Required Minimum Payments as a Percent of RRIF Balance
End of Year
Age | Following Year
Minimum | End of Year
Age | Following Year
Minimum | 65 | 4.00% | 83 | 9.58% | 66 | 4.17% | 84 | 9.93% | 67 | 4.35% | 85 | 10.33% | 68 | 4.55% | 86 | 10.79% | 69 | 4.76% | 87 | 11.33% | 70 | 5.00% | 88 | 11.96% | 71 | 7.38% | 89 | 12.71% | 72 | 7.48% | 90 | 13.62% | 73 | 7.59% | 91 | 14.73% | 74 | 7.71% | 92 | 16.12% | 75 | 7.85% | 93 | 17.92% | 76 | 7.99% | 94 | 20.00% | 77 | 8.15% | 95 | 20.00% | 78 | 8.33% | 96 | 20.00% | 79 | 8.53% | 97 | 20.00% | 80 | 8.75% | 98 | 20.00% | 81 | 8.99% | 99 | 20.00% | 82 | 9.27% | 100 | 20.00% |
Hopefully the above chart will be of assistance in determining
the minimum cash flow from your RRIF.
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