How Should I
Manage My
Savings in
Retirement?
You may choose a LIF or RRIF for a number of reasons.
You may wish to continue growing your assets during
retirement (through investment gains), require flexibility
in how much cash you withdraw, or you may not be
concerned about outliving your retirement assets.
Your choice may also depend on your investment
objective (i.e. safety of principal, income or growth of
capital). With a LIF or RRIF you assume the investment
risk, which means the value of your assets may go up or
Your retirement income will likely come from
three sources: government programs, personal
savings, and your employer’s retirement plan.
The government programs consist of the Canada
down and may affect the amount of income you
receive. If your investment objective is safety of
principal or income, you may invest more conservatively
to minimize risk.
Pension Plan and Old Age Security. The assets
you have accumulated under an employer
retirement plan can be used to purchase an
annuity, set up a managed income strategy or
some combination of both.
Another consideration is ‘how much time do you want
to spend managing your retirement investments?’ If you
enjoy managing your investments, converting all or a
portion of your assets to a LIF or RRIF may make sense.
In this instance you may wish to work with a
With a managed income strategy, retirement
plan assets are transferred into either a Life
Income Fund (LIF) for registered pension plan
assets or a Registered Retirement Income Fund
(RRIF) for Group Retirement Savings Plan (GRSP)
professional investment advisor. On the other hand, if
you do not want to worry about managing your
investments, it may be easier for you to sleep at night if
you purchase an annuity that gives you a guaranteed
income.
assets. Both a LIF and RRIF are like a retirement
savings plan, but in reverse. You decide how
your assets are invested and instead of making
contributions you must make withdrawals
(according to government rules) that will provide
you with taxable income.
The choice to pursue a LIF or RRIF strategy at
retirement will be unique for each individual. It is
recommended that you consult with a financial planner,
before retirement, to review your situation and the
options available.
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PROTEUS