A low-risk alternative for post-RRSP investing

Annuities are pricy at current low rates, but they provide certainty.

Gail Bebee 27 March, 2015 | 5:00PM
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One day you will need to shut down your RRSP. It's mandatory to do so by the end of the year you turn 71. One day you will need retirement income. How will you reconcile the two?

Transferring RRSP holdings to a registered retirement income fund (RRIF), investing the money in income-generating investments and making regular withdrawals is the road that many retirees take. The investments must be managed to ensure sufficient cash is available to pay out the target withdrawal. This figure must be no less than the government-specified minimum, an amount which increases every year.

The RRIF route involves taking risks. The RRIF investments you hold could perform poorly and fail to generate enough income. At some point, you may no longer be capable of making decisions about your investments. You could run out of money if you live longer than expected. Inflation could destroy the purchasing power of your RRIF income.

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About Author

Gail Bebee

Gail Bebee  Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at gbebee@gailbebee.com; her website is www.gailbebee.com.

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