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Retirement Income Options
Introduction to Your Retirement Income Options
Visit each of the sections below for an easy-to-understand introduction to your Retirement Income Options.
- What is a Retirement Income Option?
- When and how to convert your savings into retirement income
- The benefits of a retirement income plan
- Six steps to a comfortable retirement
- What is a Retirement Income Option?
Retirement Income Options (RIOs) provide you with a retirement income stream using the money you saved during your working years. Many of these retirement income options offer tax-deferred growth, similar to your Retirement Savings Plan (RSP).
The most common type of RIO is a Retirement Income Fund (RIF). A RIF gives you the flexibility to determine the amount of income you withdraw each year from your retirement savings. The only requirement is that you receive a minimum annual amount, according to a predetermined schedule set by the federal government. You can increase, decrease or change your income stream any time you choose. You only pay tax on the money you withdraw from your plan each year.
A RIO is also available for your Locked-in RSP (LRSP) or Locked-in Retirement Account (LIRA) in the form of a Life Income Fund (LIF), Locked-in Retirement Income Fund (LRIF) or Prescribed Retirement Income Fund (PRIF), depending on the governing legislation of the original pension plan.
- When and how to convert your savings into retirement income
Your Retirement Savings Plan (RSP) can be converted to a form of retirement income at any time, but no later than the end of the calendar year in which you turn 71. At that time, you'll have three choices:
- Convert your RSP to a Retirement Income Fund (RIF)
- Convert your RSP to an annuity
- Withdraw the entire amount of your RSP in one lump sum
A TD Canada Trust Investment Consultant can help you determine --
- What Retirement Income Options are best suited to your needs
- How to structure your investments so that your income lasts a lifetime
- How to take advantage of tax-deferred growth
- The benefits of a retirement income plan
Convenience -- income can be deposited into your account, then transferred between your accounts, with a little set aside each month to pay your annual income tax. We'll even help you consolidate your retirement savings into one comprehensive plan for easier management and recordkeeping.
Access to advice -- we're always here to answer your questions and help you make any adjustments to your RIF account.
Confidence -- with a written plan, you'll always know where you're going and how you're going to get there. That leaves you free to focus on the things that matter most to you.
- Six steps to a comfortable retirement
There is no magic formula that will generate the ideal retirement strategy for everyone. However, the following time-tested steps are a proven approach to building a long-lasting, comfortable retirement nest egg.
Step one: Find an Advisor you feel comfortable with.
Establishing a level of comfort with an Advisor is an important step. Throughout the planning stage and your retirement years, the two of you will be discussing many important and personal issues. Be sure to have a written agreement that defines the terms of your Advisor's compensation and be clear about what you expect in the way of client service.
Step two: Gather information and define your goals.
Taking an inventory of your assets and income sources will help you and your Advisor create a personalized retirement plan for you. You'll need to gather the documents that detail your financial situation such as, pension plan statements, insurance policy statements etc. This information will be combined with a summary of your values and needs, including tolerance for investment risk, and your specific lifestyle goals.
Step three: Analyze the strengths and weaknesses of your financial position.
The investments that made it possible for you to retire may not be the best investments for you when you're retired. Your financial advisor will help you analyze the financial information you gathered in step two in order to define any potential areas of concern, strategies to be employed and an overall assessment of the action to be taken in order to help you meet your goals. This should include cash flow analysis as well as retirement, insurance and tax planning considerations.
Step four: Commit your goals to paper.
A written retirement plan is both a road map and a checklist. Either alone or with your financial advisor, use this document to evaluate any additions or deletions to your retirement portfolio and make adjustments as you deem them necessary.
Step five: Implement your action plan.
Implementing your retirement plan may require the assistance of qualified professionals. Often, a financial advisor will execute many of the strategies in your plan for you. Sometimes, you'll need the help of other investment and financial experts, such as lawyers or accountants. The most important thing is to have a team of reliable specialists at your disposal.
Step six: Monitor your progress through periodic reviews.
Periodic monitoring ensures that an investment portfolio remains on track. Plan to review your written strategy at least annually. Look for any changes in your financial position or attitude that may affect your investment goals or tolerance for risk. Then, make sure that the investment mix you've chosen still complements your overall goals.
For help in setting your retirement goals and understanding your Retirement Income Options, feel free to visit any TD Canada Trust branch or call 1-800-560-6377 any time for more information.
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