Public Service Credit Union - Saving & Investing for Retirement

RRIFs

A RRIF is basically a RRSP in reverse. You put money into RRSPs while you were working to save on taxes every year. When you eventually switch your money over to RRIFs, you'll be drawing money out, and paying taxes on that money as you do.

The benefits of RRIFs are that they allow you to control the amount of money paid to you so you remain actively involved in all investment decisions. There is no maximum withdrawal limit, and the minimum limit increases to reflect inflation until it stops at 20% when you turn 94. You can adjust your withdrawals to reflect your lifestyle. For example, larger withdrawals can be made every few years if you decide you want to travel around the world or choose to make a large investment. They are fairly flexible option.

RRIFs also make estate planning easier if you're married. You can set it up so your spouse will be able to receive the full amount of the RRIF as your beneficiary. Alternatively, you can designate your spouse as the "successor annuitant", in which case the RRIF carries on for him or her the way it was originally set up for you.

Reverse Mortgages

This is simply a loan against your house that you don't have to pay back as long as you live there. To qualify you must be 62 years or older and own your own home.

The amount of the loan depends on your age and the value of your home at the time you sign the agreement. You can receive the loan in several ways. You can take it in one lump sum at the time you sign. You can get a credit line that allows you to withdraw cash advances when you need them. You can also set up a monthly cash advance system that will last a specified amount of years or as long as you own the house. You can use a combination of any or all of these too.