Retirement Income Funds
Who is the one who works day and night and does not want to have an opportunity to have a really good rest? A guess there is no such a person. At least each of us tries to do out best to earn for good vacations in order to relax and forget about all the hardships we have to face while working. The same can be said about the retirement age, when everything connected with action, movement and rush is left behind. Of course we do not work in vain and we do deserve at least some reward. Retirement income funds are created for this very purpose.
More often you can come across the notion of a Registered Retirement Income Fund, or RRIF in short. What does this phrase mean? And will it really help individuals to ensure their retirement age? It is interesting to note that this very notion does not exist isolated from some other phenomenon. This phenomenon is called RRSP which stands for Registered Retirement Savings Plan. Both RRSP and RRIF are registered with the Canada Revenue Agency. The essence is as such: when you reach the age of 69 you should convert your RRSP into RRIF, but of course if during your life you have been investing the money into registered retirement savings plan. The future withdrawals from the RRIF depend on the age of the investor. So an investor can take an amount of money determined by a certain percentage depending on the factor mentioned above. Besides the funds that you withdraw are taxed on a regular basis while those that remain in the RRIF grow tax-free. But Registered Retirement Income Fund is not connected only with the RRSP. Here one can also mention such notions like LIF and LIRA. For better understanding what is what I will explain. LIF stands for Life Income Fund that receives money from a Locked-in Retirement Account or LIRA. LIRA in its turn restricts maximum withdrawals from the plan and in this way provides a life income. And if one day you come to a dilemma what to choose, either a Registered Retirement Income Fund or a Life Income Fund, remember that the choice entirely depends on the plan that you already have. So, if you have a Registered Retirement Savings Plan or RRSP, then it converts to a Registered Retirement Income Fund or RRIF. But if you hold a Locked-in Retirement Account or LIRA, then it turns into Life Income Fund or LIF. Anyway, whatever you choose remember that you have something to rely on. You have your own money that was saved in order to make your retirement life easier and happier, so just use this chance. Besides, another stimulus to work harder during the life will not be out of place. |