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Your RRIF should have a Cash Wedge

Your RRIF should have a Cash Wedge.


If you turn 71 in 2023 you will need to change your Registered Retirement Savings Plan (RRSP) or Spousal RRSP to a Registered Retirement Income Fund (RRIF) or Spousal RRIF before December 31st 2023. There is also the option to purchase a payment annuity with up to a 15-year guarantee period. The annuity pays the income for your lifetime. The guarantee period is relevant to your beneficiary or beneficiaries as it guarantees them at your death a number of years of payments from the issue date of the annuity up to a maximum of 15 years. For example a life annuity 15 years guaranteed would provide lifetime income to the annuitant (RRSP owner) and payments at death for the balance of time until 15 years is up ie. 2038 or the commuted value.


A RRIF or Spousal RRIF is invested and generates an income in accordance with Canada Revenue Agency guidelines which is paid out monthly, quarterly or annually. The individual can elect the amount of the payment which must at least be equal to the required annual minimum payment. At death the RRIF may be paid to a named beneficiary. If the beneficiary is a spouse the lump sum value of the RRIF on the date of death may be transferred tax deferred to the spouses RRIF or be used to purchase a life annuity. No beneficiary other than a spouse can receive the proceeds tax deferred. If the beneficiary is your estate, children, other individuals or a charity, income tax on the value at the date of death is taxable in the year of death. 


When setting up a RRIF, the investment mix should include a cash wedge! A cash wedge is a portion of the investment in cash, money market or short-term savings / daily interest fund to use for income payments in the near future. We recommend a series of laddered guaranteed investments / gic’s for 1, 2 and 3-year terms balanced by investments in equity/ balance funds in a portfolio. The percentage mix of each cash/gics/fixed income (Bonds) and Equity is determined by your tolerance to risk. Your financial advisor should be able to determine the allocation of investments for you.


Some helpful tips when setting up a RRIF is to ask questions, have your advisor shop the interest rates to find the best option for you, review the deposit insurance or Assuris plans, (for life insurance companies only) and understand the investment mix versus your individual needs for income and their risk tolerance to stock market fluctuations. Life insurance companies RRIF and Spousal RRIF’s allow for two levels of name beneficiary; a primary beneficiary and then a secondary or contingent beneficiary or beneficiaries. The option to have two layers of beneficiaries may be helpful in your estate planning! 


Seek quality advice to ensure your RRIF is designed to fit your personal needs!

Talk to your financial advisor. Get in touch.

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