I met an old colleague for coffee, and we talked about our retirement plans. In particular, we talked about what order we should spend our RRSPs, TFSAs, Corporate investments and non-registered funds. I was vaguely aware that my wife and I would each have to convert our RRSPs into RIFs no later than at the end of the year in which we turned 70. I also knew that once the money was in a RIF, there was an annual minimal withdrawal, which increased as we got older.

Money taken out of a RIF is counted as taxable income, so you only want to withdraw and pay tax on the amount of money you need for living expenses. If you have substantial savings in a RIF, you are likely to end up having to take out, and pay income tax on, more money than you need.

In order to calculate the future value of a RIF and, therefore, the expected annual minimum withdrawal, I created my RIF Calculator as an Excel Spreadsheat that can calculate the projected minimum withdrawal up to age 100.

My RIF calculator is available as a free download. I believe that it works and is accurate, but there is no warranty, and I am not responsible for any errors. Download the file, open it in Excel, and enter the year you turn 70, the value of the RIF and the estimated rate of return in the grey boxes. The spreadsheet calculates the minimum payment every year up to age 100.

If you are already over 70, put 0 in the box for the current value, and manually enter the value at the end of the last year in the appropriate space for that calendar year.

The spreadsheet calculates the minimum withdrawal. You can substitute a larger number if you want.

Personally, the spreadsheet has convinced me that my wife and I should start to take all our living expenses out of our RRSP (in our late 60s) or RIF (in our 70s). If we live into our 80s or 90s, the RIF will eventually become so depleted that the minimum payment is less than we need to live on, and we can start spending from other resources. Your mileage may vary, and your accountant or financial planner may offer advice more suited to your specific situation, but I found the modelling useful.

Please email any comments or corrections to me at johnpoyston@gmail.com.