Key takeaways:
- A Registered Retirement Savings Plan (RRSP), a primary savings vehicle for many Canadians’ retirement incomes, must be converted to a Registered Retirement Income Fund (RRIF) by the end of the year in which you turn 71 or be withdrawn.
- RRIFs offer tax-deferred growth, enabling retirees to manage their savings, withdraw funds effectively, and benefit from estate planning advantages.
- RRIFs have mandatory minimum withdrawal requirements based on age; all withdrawals are considered taxable income.
- Flexible investment options within your RRIF, like Skyline’s private alternative investments in real estate and renewable infrastructure, can provide stable returns and help diversify your portfolio.
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.
What is a RRIF?
RRIFs were introduced in the 1978 federal budget to offer Canadians flexible retirement income options. You can open multiple RRIF accounts with different financial providers in Canada.
There are two main types of RRIFs: individual RRIFs allow you to hold your own retirement savings and receive income; and spousal RRIFs enable you to receive funds from a spousal RRSP, aiding in income splitting and tax planning.
You can transfer funds to your RRIF from sources such as a Registered Retirement Savings Plan (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.
It’s never too late for retirement planning, but 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. Contributing to a registered account like an RRSP in your working years not only helps reduce your taxable income at that time—it also sets you up for a steady retirement income stream when it’s time to convert the account to a RRIF.
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) and renewable infrastructure funds.
- 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 you to control 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 (including an option to name your spouse as the successor annuitant), spousal accounts to help with income splitting, 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 each year 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.
| Age of the RRIF annuitant, spouse, or common-law partner | Annual minimum withdrawal |
|---|---|
| 71 | 5.28% |
| 72 | 5.40% |
| 73 | 5.53% |
| 74 | 5.67% |
| 75 | 5.82% |
| 76 | 5.98% |
| 77 | 6.17% |
| 78 | 6.36% |
| 79 | 6.58% |
| 80 | 6.82% |
| 81 | 7.08% |
| 82 | 7.38% |
| 83 | 7.71% |
| 84 | 8.08% |
| 85 | 8.51% |
| 86 | 8.99% |
| 87 | 9.55% |
| 88 | 10.21% |
| 89 | 10.99% |
| 90 | 11.92% |
| 91 | 13.06% |
| 92 | 14.49% |
| 93 | 16.34% |
| 94 | 18.79% |
| 95 and older | 20.00% |
| Source: Government of Canada, as of February 2025. | |
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
- RRIF value after withdrawal: $473,000
In the following year:
- Age: 73
- Updated RRIF value (assuming no investment growth or depletion for simplicity): $473,000
- New minimum withdrawal rate: 5.53%
- Minimum required withdrawal: $26,156.90
Understanding how your RRIF income is taxed
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 the RRIF withdrawal rules when planning for taxes, as higher withdrawals could push you into a higher tax bracket.
RRIFs and the Old Age Security clawback
Many Canadian retirees receive Old Age Security (OAS), a taxable government pension that is paid out monthly. This benefit is subject to a recovery tax—more commonly known as a clawback—where every taxable dollar you make over a certain amount ($93,454 in 2025; the figure changes annually) is subject to a 15% tax.
Since RRIF withdrawals are subject to taxation, it’s very important to carefully plan their timing and the amount withdrawn, so you can stay below the OAS clawback threshold as much as possible. Income splitting with a lower-earning spouse (like through a spousal RRIF) can also help you stay below the threshold. Others choose to minimize the clawback by delaying their OAS payments and living off their RRIF withdrawals in the initial years.
Enhancing your RRIF in 2025/2026 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. If you’re considering how to invest your RRIF funds in 2025/2026, it may pay off to consider the potential tax efficiencies and other benefits of private alternatives.
Skyline offers four private alternative investment products, which are all eligible for registered accounts including RRIFs.
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 infrastructure
Renewable infrastructure is needed to power Canadian homes and businesses as climate change fuels the demand for sustainable energy sources. Skyline Clean Energy Fund consists of assets across Canada focusing on renewable energy production, including solar and biogas infrastructure.
All four of Skyline’s investments have a proven track record of resilience amid market uncertainty, with 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. Speak to a Skyline Wealth Management expert to discuss how private alternatives in your RRIF can enhance your retirement income in 2025 and 2026.
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