RRIFs Explained: From RRSPs to Retirement Income

After years of dedication and hard work, retirement offers the chance to finally prioritize what matters most—freedom, fulfillment, and the life you’ve envisioned. But are you confident that you’ve planned adequately for this new chapter? What if you could enhance your retirement income with financial investments? One way to do this is by understanding and utilizing Registered Retirement Income Funds (RRIFs), which can offer flexible retirement income options.

The average Canadian worker will typically retire at 65, the eligibility age for government benefits like the Canada Pension Plan and Old Age Security.

Although it’s never too late for retirement planning, starting as early as possible can help ensure financial security well into your golden years to maintain the lifestyle you’ve worked hard to achieve. One standard savings vehicle is a Registered Retirement Savings Plan (RRSP). A recent poll from Edward Jones Canada shows that only 39% of Canadians plan to contribute to their RRSPs in 2025—a significant 10% drop from the previous year. Contributing to your RRSP in your working years is essential to maximize contribution room and reduce your taxable income while working. However, by the end of the year you turn 71, you are required to convert your RRSP to a RRIF to start withdrawing your savings—providing a steady income stream to support your retirement.

What is a RRIF?

Registered Retirement Income Funds (RRIFs) were introduced in the 1978 federal budget to offer Canadians flexible retirement income options.

There are two main types in the context of ownership. Individual RRIFs are set up by an individual to hold their retirement savings and receive income. Spousal RRIFs are when you receive funds from a spousal RRSP, allowing the recipient to receive funds, which can aid in income splitting and tax planning. You can open multiple RRIFs with different financial providers in Canada.

You can transfer funds to your RRIF from sources such as an RRSP, a Pooled Registered Pension Plan (PRPP), a Registered Pension Plan (RPP), a Specified Pension Plan (SPP), or another RRIF. Your financial institution (the carrier) then makes regular payments to you (the annuitant). Earnings in a RRIF grow tax-free, but withdrawals are taxed as income.

What are the advantages of having a RRIF in retirement?

• Tax-deferred growth: A major benefit of a RRIF is that funds held within it can be invested and grow tax-free until withdrawal.

• Flexible investment options: You can invest in various qualified assets through your RRIF, such as Guaranteed Investment Certificates (GICs), mutual funds, stocks, bonds, and private alternative investments such as private real estate investment trusts (REITs).

• Control over withdrawals: RRIFs give you greater flexibility by allowing you to manage how and when you withdraw your retirement income. Unlike an RRSP, which is focused on saving, a RRIF is designed to provide a steady cash flow in retirement through mandatory minimum withdrawals, while still allowing control over the investment strategy.

• No contribution limits: RRIFs do not have contribution limits because they are not intended for new contributions. Instead, they are designed to withdraw funds accumulated in other retirement accounts, such as RRSPs and pensions. Once your RRIF is set up, you cannot add new money; you can only transfer existing funds from other accounts.

• No withholding tax on minimum amounts: Minimum withdrawals from a RRIF are not subject to withholding tax, providing more immediate access to your funds without any immediate tax deductions.

• Can be structured for estate planning: RRIFs can be structured to assist you with estate planning by allowing beneficiary designations, spousal RRIFs, and tax-efficient strategies.

When do I have to convert my RRSP to a RRIF?

There is no minimum age to convert your RRSP to a RRIF, but you must do so by the end of the calendar year you turn 71. Once an RRSP is converted to a RRIF, no further contributions can be made, and the account is strictly used for withdrawals.

What is the minimum amount I have to withdraw from my RRIF each year?

You must withdraw a minimum percentage from your RRIF based on your age, or for spousal RRIFs, the age of your spouse or common-law partner. The older you are, the higher the required withdrawal. All withdrawals are subject to income tax. Below is a chart from the Government of Canada that indicates the minimum RRIF percentage you must withdraw based on your age at the start of the year.

Example: RRIF minimum withdrawal calculation for a 72-year-old retiree

• Age: 72
• RRIF value: $500,000
• Minimum withdrawal rate: 5.40%
• Minimum required withdrawal: $27,000

In the following year:

• Age: 73
• Updated RRIF value (assuming no growth or depletion for simplicity): $500,000
• New minimum withdrawal rate: 5.53%
• Minimum required withdrawal: $27,650

Understanding RRIF taxation on withdrawals

In Canada, RRIF withdrawals are considered taxable income in the year they are received. For the example above, if a retiree withdraws $25,000 from their RRIF, that amount is added to their total income for the year and taxed at their marginal tax rate. It’s important to factor in RRIF withdrawals when planning for taxes, as higher withdrawals could push you into a higher tax bracket.

Enhancing your RRIF with private alternative investments

While RRIFs offer flexibility and steady income, how you invest the funds within them can significantly impact the RRIF’s long-term growth and stability—especially in today’s unpredictable markets.

Private alternative investments, such as private REITs and renewable infrastructure funds, can offer a variety of benefits, including diversification and tax-deferred growth. They also have the potential to provide stable, income-generating returns, which can be especially valuable for retirees seeking reliable cash flow. When you’re considering how to invest through your RRIF for long-term financial security, it may pay off to think beyond traditional investments and consider private alternatives.

Skyline offers four private alternative investment products, which are all registered account eligible.

Multi-residential housing

Everyone needs a place to live, whether they own or rent. Skyline Apartment REIT is a portfolio of professionally managed multi-residential properties across Canada.

Industrial warehousing, logistics and distribution

Logistics and warehousing ensure the efficient flow of goods and services across Canada. Skyline Industrial REIT features 100% Canadian industrial properties along major transportation routes.

“Everyday essential” retail

When you think of retail, the first thought that might come to mind is large department stores offering clothing, electronics, or home goods. Skyline Retail REIT consists of retail properties with a focus on “everyday essentials” anchored by grocery stores and pharmacies across Canada.

Renewable energy investing

Renewable energy is needed to power Canadian homes and businesses as demand grows for sustainable energy sources because of climate change. Skyline Clean Energy Fund consists of assets across Canada focusing on renewable energy production, including solar and biogas infrastructure.

These investments, which specialize in real estate and renewable infrastructure, have a proven track record of resilience amid market uncertainty, and have provided historical annualized returns of 8-14% since inception. ¹

Wealth management is critical to ensuring financial security and stability for seniors in retirement, and understanding RRIFs is a crucial component of effective retirement planning. By investing in private alternatives through your RRIF, you can help maximize your retirement income and enjoy the lifestyle you want well into your golden years. Contact a Skyline Wealth advisor to discuss how private alternatives in your RRIF can enhance your retirement income.