Your RRSP must mature at the end of the year in which you turn 69. So what happens next? Canadians generally face three options: cash out the RRSP in its entirety, purchase a term or life annuity, or roll-over their RRSP assets into a Registered Retirement Income Fund, also know as a RRIF (or some combination of the above). Let's take a closer look at each of these options, so you can understand what's the best choice for you.

Option #1 - Cashing out
The first option, collapsing your RRSP and paying applicable taxes immediately, is probably the simplest to understand. It is also the least viable: the tax man will deal with a huge lump-sum payout severely, potentially walking away with almost half of your nest egg.

Option #2 - Purchase an annuity
Purchasing an annuity is probably a better alternative. Annuities can be purchased from most major insurance companies, and can provide a guaranteed income level for life. A number of options exist: for example, you may want to index your annuity to account for inflation, or you may wish to permit a beneficiary (such as your spouse) to receive the annuity for a given time after you die. The downside? An annuity does not allow you to control your own investments: however well the markets may be performing, your income level is set for as long as you live.

Option #3 - Roll assets into a RRIF
The third option is to simply roll over your RRSP assets into a RRIF. In most instances, a RRIF behaves exactly like an RRSP: eligible investments are similar, and individual investors can control how and in what they invest. You can withdraw as much as you'd like from a RRIF, but there is a pre-determined minimum withdrawal schedule. For those with a large RRIF, these minimum withdrawals could push you into the highest tax bracket.

What should you do?
While every investor has different needs, a good choice is to combine options two and three. By purchasing an annuity with a portion of your retirement savings, you reduce the risk of outliving your nest egg. By retaining control over another portion of your assets, you're free to pursue the best possible investment opportunities, wherever they may be.

Before your RRSP matures, make sure to seek some professional guidance. With so much riding on it, you want to make sure the years after the RRSP are as financially healthy as possible.

Yours truly,

Tactical Asset Management, Inc.
phone: (306) 757-2121
fax: (306) 347-3655
e-mail: inquiry@tacticalassetmgmt.com
website: www.tacticalassetmgmt.com