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The Money Management Newsletter: Retirement Income Planning
New age RRIFs

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 71.

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 71, 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 71, 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 71. If you are 72 at the end of the year, 7.48% of your year-end RRIF balance must be withdrawn by the end of the next year.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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