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A growing body of analysis suggests current minimum RRIF withdrawals are too high and need to be revised to reflect new economic realities facing seniors and the broader economy.

Read: Should we lower RRIF withdrawal rates?

“If seniors drain their RRIFs too quickly, then that could put a burden on government to spend more money on programs like the guaranteed income supplement,” says Rob Carrick in a Globe & Mail article.“People have to take responsibility for their own retirement savings…[b]ut the government can still offer some help.”

RRIF rules were devised in the early 1990s. Back then, yields were about 6% to 8% and life expectancy in the mid-70s for men and about 80 for women, notes Carrick. “Today, a five-year Government of Canada bond yields 1.5%, and people will live to an average 80 for males and 84 for females, according to World Health Organization data.”

Read: When to avoid an RRSP

“A RRIF withdrawal schedule suited to today’s world would allow seniors to withdraw less per year and max out at 15%,” Carrick writes, citing remarks made by Clay Gillespie, managing director at Rogers Financial Group, before a Parliamentary committee last week.

Read more here.

Also read:

Don’t whiff on RRIFs

Best ways to mature RRSPs

Originally published on Advisor.ca

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