The Citizen, 1991-02-06, Page 8PAGE 8. THE CITIZEN, WEDNESDAY, FEBRUARY 6, 1991.
FINANCIAL PAGE
More people now picking RRIFs than annuity plans
BY JIM CAMPBELL, C.A.
If you’re getting on in years and
own registered retirement savings
plans you’ve probably pondered
your choices when it’s time to
dispose of them.
The law doesn’t allow you to
have RRSPs beyond the end of the
year in which you reach 71. Unless
you cash them and pay tax on the
full amount in one lump, you’ll
have to convert them into a stream
of income payments in the form of
annuities or RRIFs (registered
retirement income funds) or a
combination. The income paid to
you is then taxable in the year
received, but the money still in
the plans remains tax-sheltered.
Thanks to a liberalization in
1986 of the rules concerning
RRIFs, they have become more
popular than annuities. Annuities
are paid either for life or to age 90.
$25O2OOO
j
$150,000
$100,000
$ 50,000
$200,000
$63,003
Total RRSP
fund after
20 years of
$1,000 annual
i ontributions*
RRIFs, on the other hand, must
always be paid out by age 90.
The law sets a minimum
amount that must be paid out of
an RRIF each year, but beyond
this basic requirement, tremen
dous flexibility is alllowed.
Among other features, you can
have more than one RRIF, take
out lump sums,, convert an annu
ity into an RRIF or an RRIF into an
annuity (you might want to lock in
your money if rates are especially
high) and you can choose from a
variety of payment options, and
change them if you like.
There’s also flexibility in the
investment options available un
der RRIFs. You can have a daily
interest RRIF or one that pays the
same interest rate for a fixed
term, like a guaranteed invest
ment certificate.
You can also buy a RRIF with
payments geared to the perfor
mance of a mutual fund or - the
ultimate control over your retire
ment income - a self-administered
RRIF that can include stocks,
bonds, treasury bills and mort
gages.
If you’re married, it’s important
to consider your surviving spouse
will eventually receive the money
anyway if he or she is the named
beneficiary, it’s advisable to name
your spouse as successor annuit
ant. That way, the payments
would continue without disruption
at your death.
The life insurance companies,
trust companies, banks and other
financial institutions market their
plans directly and through annu-
ity/RRIF brokers.
Jim Campbell is with National
Trust.
Make the
GIC Rates
3Z O/ «NO FEES/4 /o -all investments
GUARANTEED & INSURED
IB mo. .FUNDS TRANSFERABLE
R . S. P. VIA CHARTER BANK
r 4^4 /V
i-2773
REINVESTMENTS I
God^ich 1-800-265-55011
In this example, $20,000 was invested in two RRSPs at 10
percent, compounded annually. One was built with $ 1,000
a year for 20 years, the other with only $500 a year, but
for 40 years. In both cases, the total contributed is the
same. But the plan started earlier grew four times as much
as the late starter. It pays to start your RRSP now, no
matter how small your contribution.
TD Bank
R.R.S.P.
TIME AGAIN
We represent over 20 Trust & Life
Insurance Companies
G.I.C.'s-NO LOAD FUNDS
For your convenience & personal,
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for an appointment 887-6663
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IT'S
How to get
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107 Main St. N.
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Seaforth: 527-0794 London: 432-1841
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oice
the professionals for your
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