RRIF, LIF and Annuities
The RRIF is an extension of the registered retirement savings plan (RRSP). It allows you to make the best use of the savings you have accumulated throughout your working life: you periodically withdraw a portion of your savings and continue to accumulate tax-sheltered income.
You are required by law to withdraw a minimum annual amount from your RRIF. Over and above that amount, all periodic and lump sum withdrawals are taxable. No maximum withdrawal applies.
A LIF acts as an extension of a locked-in retirement account (LIRA). It allows you to periodically withdraw a portion of your savings accumulated in a pension fund and receive retirement income as you need it. A LIF is similar to a RRIF, except for the source of the funds and the withdrawal of a maximum annual amount.
You are required by law to withdraw a minimum annual amount and a maximum annual amount from your LIF. However, it is now possible to withdraw a higher annual income in exceptional situations.
The annuity is an ideal investment if you want to guarantee the payment of your fixed expenses throughout your life. It allows you to convert a portion of your savings into a fixed and guaranteed income that you receive on a regular basis. You can receive this amount for a specific period or for your lifetime. Highly volatile stock markets and low short-term interest rates make it a sound choice.