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.
“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.
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