CARP advocates ending mandatory RRIF withdrawals

CARP members worry about outliving their savings due to mandatory RRIF withdrawals.  The current mandatory RRIF withdrawal rules do not reflect increasing life expectancies, nor the reality of much shorter time spent in retirement, given that people are working longer than ever before.

COVID-19 brought fears around financial security to the forefront of CARP members’ minds.

While part of the federal government’s economic response during COVID-19 was to reduce the minimum RRIF withdrawal requirement by 25% in 2020, the fact is that many seniors would prefer to indefinitely suspend mandatory RRIF withdrawals.

When individuals are forced to draw down on their savings, they risk outliving their funds. This problem is compounded by lower rates of return, declines in personal savings rates, and reduced access to workplace pension plans. Many depend on their RRIF to provide sustained income throughout their later years.

More than 3 in 4 of our members support this change—it has never been more necessary than it is now.

Background

The problem with mandatory RRIF withdrawals

Once Canadians turn 71, they must convert their RRSPs to RRIFs and begin making mandatory withdrawals at a set rate. These rules do not reflect increasing life expectancies, and much shorter time spent in retirement, as people are working longer than ever before. When individuals are forced to draw down on their savings, they risk outliving their funds. This problem is compounded by lower rates of return, declines in personal savings rates, and reduced access to workplace pension plans.

Suspending mandatory RRIF withdrawals is a tangible action that the federal government can take to immediately improve the financial security of Canada’s retirees.