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MSA lot of retirement planning focuses on...
▶️HOW you can you grow your RRSP.
But very few people are shown how RRIF withdrawals actually work once your RRSP converts.. and that can be JUST as important.
📣 So, let’s talk about it!
Each year, your minimum RRIF withdrawal is calculated using:
✅ Your age
✅ The value of your RRIF on January 1
Let’s look at an example:
𝘓𝘦𝘵’𝘴 𝘴𝘢𝘺 𝘺𝘰𝘶’𝘳𝘦 72
𝘠𝘰𝘶𝘳 𝘙𝘙𝘐𝘍 𝘪𝘴 𝘸𝘰𝘳𝘵𝘩 $500,000 𝘰𝘯 𝘑𝘢𝘯𝘶𝘢𝘳𝘺 1
𝘛𝘩𝘦 𝘮𝘪𝘯𝘪𝘮𝘶𝘮 𝘸𝘪𝘵𝘩𝘥𝘳𝘢𝘸𝘢𝘭 𝘢𝘵 72 𝘪𝘴 5.40%
✅ That means you’d be required to withdraw:
$𝟻𝟶𝟶,𝟶𝟶𝟶 × 𝟻.𝟺𝟶% = $𝟐𝟕,𝟎𝟎𝟎 𝐭𝐡𝐚𝐭 𝐲𝐞𝐚𝐫
Once that minimum is calculated using your January 1 balance, it doesn’t change, even if your RRIF value moves up or down throughout the year.
💰 And that withdrawal is added to your taxable income alongside things like:
◾ CPP
◾ OAS
◾ Pension income
❌ Not because you necessarily needed the money. ☑️ But because the rules require it.
And here are some additional tips that many don’t realize:
▶️ Your financial institution automatically calculates your RRIF minimum each year
▶️ You generally don’t have to take a minimum withdrawal in the first year you open a RRIF
With this information in mind, you may choose to strategically convert part of your RRSP earlier, withdraw in lower-income years, and/or spread your taxable income over time.
👉👉👉 If you’d like to see what your retirement income could look like, including how RRSP/RRIF withdrawals may impact your taxes, 💥𝐛𝐨𝐨𝐤 𝐚 𝐜𝐨𝐦𝐩𝐥𝐢𝐦𝐞𝐧𝐭𝐚𝐫𝐲 𝐜𝐥𝐚𝐫𝐢𝐭𝐲 𝐜𝐚𝐥𝐥💥 using the link in my bio.
👉👉 Not sure yet if you’re on track for the retirement you’re hoping for? We can map that out, too!
Are you planning how to grow your retirement savings… or how to withdraw them too?
#retirementplanning #rrsp #rrif #canadianfinance #canadafinance
@ms.moneyandmath
