Tag Archives: withdrawals

Post-budget primer on RRIF withdrawal strategies 2015 and beyond

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Adrian
Adrian Mastracci, KCM Wealth

By Adrian Mastracci, KCM Wealth Management

Special to the Financial Independence Hub

“Be very mindful of your RRIF. Understand its purpose. Then review it periodically to make sure it’s on track to deliver.”

It’s time to start paying special attention to RRIFs.
Even if you don’t yet need one.

RRIFs (Registered Retirement Income Funds) are income withdrawal plans, while RRSPs are savings plans.

No deposits are allowed to be made into a RRIF after the RRSP conversion.

The venerable RRIF remains firmly entrenched as a prominent retirement planning vehicle.
It has become an essential foundation of many a retirement nest egg.

Starting a RRIF at age 71 implies long-term planning, say to age 90 and beyond, especially if there is a younger spouse.

That’s one very good reason to be aware of the details.

Two major changes were proposed in the recent Federal Budget, starting in 2015:

  • Minimum RRIF draws are reduced for ages 71 to 94 (See highlighted figures in table below).
  • Re-deposit of the difference in draws is allowed by Feb 2016.

Continue Reading…

Is 3% the new 4%? Bengen rule of thumb questioned

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For the longest time, Robert Bengen’s 4% annual withdrawal rule (plus an inflation adjustment) was the gold standard for simplicity in estimating SAFEMAX: a safe annual maximum withdrawal rate  from retirement nest eggs that minimizes the odds of having to break sharply into principal at too fast a rate, thereby leaving little or nothing in advanced old age.

Of late, there’s been a lot of articles questioning this rule. Actually, it’s been going on for awhile.  The following piece from Investment News goes back to early 2012. You may have to register to read the full piece but it’s free once you enter your email and probably worthwhile to bookmark them anyway. And you might want to do the same here at the Financial Independence Hub too!  — JC

Here’s the article.

P.S. This would be a good topic for our forums, which we hope to have up and running this week. Stay tuned!