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RRSP - RRIF Converter

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The income you eventually receive from your RRIF depends on more factors than the amount of your contributions to your RRSP and the rate of return on your investment. For example, one of these is the age at which you retire and stop making contributions. Another is the age at which you begin drawing payments from your RRIF

(Hint: This does not necessarily have to be your retirement age - you can begin drawing on your RRIF before you retire or you can defer your first payment until as late as the year in which you turn age 72).

Experiment with different scenarios and see how adjusting contributions, rates of return and key ages can significantly impact your RRIF income.

Increasing payments are adjusted each year for an increase in the cost of living and provide you with increasing income each year. Theoretically you will have the same purchasing power every year. While your income seems higher in your final year than in your first year, the purchasing power remains the same in each of these years.

Level payments keep your payments at the same amount each year but with cost of living increases these payments actually result in declining purchasing power each year. In other words, your buying power is greatest in your first year of retirement but declines over time and is lowest in your final year. The payments are equal but the actual purchasing power declines.