Factors to Consider When Choosing a Retirement Product
As you approach your retirement, you will find a range of different income options available that will allow you to draw on your retirement savings. The options range from flexible retirement plans, like Registered Retirement Income Funds (RRIF) – which allow you to withdraw any amount you want (subject to certain required minimums) – to fixed payment plans like annuities, which provide guaranteed payment of a specified amount each month.
In all cases, the Canada Revenue Agency requires that you buy a retirement income product with your registered retirement savings by December 31 in the year you turn 71.
It is important to structure your retirement income plan to suit your needs. Some individuals can draw other sources of income, from an inheritance or a monthly guaranteed pension, and need to rely less on their savings. Some may want an extremely flexible source of funds that lets them withdraw income as needed. For others, security and a steady income flow are of prime importance.
Whatever your particular financial needs are in retirement, you will want to make the most of the savings you have, and that is why a retirement income plan is so important. You’ll have a great deal of choice in structuring a plan to meet your needs, so be sure to take the time you need to create the right plan for you.
It is a good idea to consult a financial advisor and your family members when looking at your investment goals to discuss all your options and plans.
Choosing a retirement investment income product will depend on your financial situation and lifestyle needs. You’ll need to consider certain factors, such as the risk of inflation or the need to withdraw additional funds to cover any emergencies. Since income tax is payable on the money withdrawn, a good strategy for many Canadians is to take only the money needed each month, subject to government minimum restrictions. This way, your savings can accumulate tax-free for as long as possible.
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