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Retirement Planning

Selecting An RRSP Maturity Option

If you are approaching retirement, determining how you are going to fund your retirement involves careful planning. In today's dollars, many people will require between 60 percent and 80 percent of their current income to maintain their present lifestyle. However, if you take into account the effects of inflation and other factors, your income needs may prove to be considerably more.

The decisions you make now concerning your RRSP maturity options can have a tremendous impact in later years. To finance your retirement lifestyle, you'll need to choose income options appropriate to your situation. And, you'll need effective management to make your retirement capital last. Your CIBC Wood Gundy Investment Advisor can help you calculate your retirement income needs and resources as well as help you determine the most appropriate RRSP maturity options.

While you can select an RRSP maturity option at any time, you must absolutely do so by the end of the year in which you turn 71 if you wish to maintain the tax-sheltered status of your registered assets. If you fail to select an RRSP maturity option, Canada Revenue Agency requires your RRSP to be deregistered with the entire amount becoming fully taxable. This additional income could push you into a higher tax bracket, and also cause you to lose some government benefits as well as income-related tax credits. Also, deregistration puts an end to tax-free compounding of RRSP assets.

Canadians do have a number of tax-advantaged solutions to put their savings to work for them during retirement. And these solutions have one simple concept in common: the money you save during your working years is transferred to a vehicle that is designed to provide you with a steady stream of retirement income. Instead of making contributions, you will be relying on withdrawals from your retirement savings to fund your retirement.

Maturity options for your RRSP are as follows:

  • Transfer your RRSP to one or more Registered Retirement Income Funds (RRIFs)
  • Transfer your RRSP to one or more registered annuities
  • Use a combination of the above

The information contained herein is considered accurate at the time of posting. CIBC and CIBC World Markets Inc. reserve the right to change any of it without prior notice. It is for general information purposes only.

Clients are advised to seek advice regarding their particular circumstances from their personal tax advisors.

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