You know you have to take a minimum amount out of your Registered Retirement Income Fund (RRIF) each year. But, you don’t know exactly how much your RRIF investments will make. Will it be enough?
Estimating your RRIF income: Getting started
There are tools that can help you make an informed guess. To start, give the best answer you can to these three questions:
- How much money would you like to take out each year from your RRIF?
- How long do you need your savings to last?
- How fast do you think your savings will grow over the years (your investment return)?
Your answer to one question may change your answer to another.
Example: Let’s say you want your money to last 20 years. You’ll be able to take out more each year than if you want your savings to last 30 years. You will also have more income if you make 6% investing than if you only make 5%.
Getting ready to calculate
You can use this to estimate your yearly RRIF payments. Your result will be based on the information you enter, such as your age, the amount of money you start with in your RRIF (opening balance), and the investment return. It also shows you what you get if you want a fixed monthly payment, or maximum payments from your RRIF.
· Use any number you want for investment return. You can base it on current interest rates, or on historical returns for investments like stocks and mutual funds. Just be realistic.
· This calculator does not take into account the fees you pay on your RRIF account or on your investments. Make sure the rate of return you use is an estimate of your return after all fees.
Estimating your income from a RRIF: an example
What if you had $100,000 to put into a RRIF? How much income could you get each year, over 25 years? Here’s an example to show you how it works. View now.
Remember: What you get from your RRIF depends on a lot of things
The numbers you get from a calculator are a guide only. There’s no guarantee you’ll get the same results. Try out different numbers and see what might happen. If you’re like most people, what you make investing will vary year to year. It’s even possible to have poor returns over several years. If that happens, it can really change your financial picture.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.