My retirement 10 min

Choosing retirement savings solutions

Take the time to choose your savings vehicles so you select the right ones to meet your needs. It's an exercise that will earn you money!

By Fonds de solidarité FTQ

Retirement can last a long time. That is why it's important to choose the savings solutions that are right for you, and prepare short- and long-term investments to keep your portfolio growing.

To help you make smart choices, here is a list of several savings vehicles that are available to Quebec retirees.

01RRSP: Registered Retirement Savings Plan

The government created RRSPs to encourage you to save for retirement. RRSP contributions are tax deductible: your savings, including any returns, are taxed only when you withdraw them. This means that by withdrawing your savings during retirement, you may benefit from a lower tax rate than during your working years. By deferring your tax bill, you could incur significant savings.

Similarly, the tax deductions you receive when you contribute to your RRSP can generate interesting returns if they are saved.

Like with any savings vehicle, you can choose the financial products that suit your investor profile and risk tolerance. This option allows you to grow your money with financial products such as stocks, bonds, guaranteed investment certificates (GICs) and mutual funds.

02RRIF: Registered Retirement Income Fund

Once you are retired, you no longer need to contribute to your RRSP. Now is the time to start enjoying your savings. One way to do this is to convert your RRSP to a RRIF. A RRIF is used to transform your savings into a source of income to finance your retirement. As a result, each year you will withdraw what you need from your RRIF, and that income will be taxed just like when you were earning while working.

There is no withdrawal limit, but you must withdraw a minimum portion of your savings each year, starting on December 31st of the year that you turn 71. Any savings you do not withdraw from your RRIF will continue to grow tax-free, the same way they did when they were in the RRSP. You can decide to convert your RRSP to a RRIF whenever you want, as soon as you retire. However, you must have done so before December 31st of the year you turn 71, since you will no longer be able to hold an RRSP as of that date. 

The Fonds de solidarité FTQ has launched the FlexiFonds offering to meet your needs and support you throughout your retirement years. With these three mutual funds, you can choose the risk profile that best suits your savings objectives. A FlexiFonds mutual fund advisor will work with you to determine your investor profile and help you choose the product that meets your needs.

03TFSA: Tax-Free Savings Account

The TFSA is another way you can save for your short- and medium-term projects. Your returns also grow tax-free and you pay no tax on your withdrawals. However, unlike an RRSP, your contributions are not tax deductible. TFSAs are more flexible than RRSPs because you can contribute or withdraw money whenever you want, whether you are retired or not. This is a great option if you want fast and easy access to your money. It can also be used to generate additional income if you work part-time during retirement or if you have reached the maximum RRSP contribution. Lastly, you can use it as an emergency fund.

04LIRA: Locked-In Retirement Account

LIRAs are very much like RRSPs, but are designed specifically for savings from an employer-sponsored pension plan. If, during your working years, your employer contributed to a pension fund for you and you then leave your job, you have the option of leaving your money in the same fund or withdrawing it and managing it yourself. If you choose to withdraw it, the value of your pension will be transferred to a LIRA and will therefore be separate from your RRSP.

Either way, you will receive your accrued pension as soon as you retire, and you will not be permitted to withdraw anything earlier than that. Similar to an RRSP, you can hold a LIRA until December 31st of the year you turn 71.

05LIF: Life Income Fund

The LIF is used to convert the savings from your LIRA into an annual source of income for your retirement.

It serves the same function as a RRIF, the difference being that there is a limit to the amount of withdraws you can make per year. This limit is calculated based on your age and LIF balance, in order to ensure that you have enough money for your entire retirement. Each year, the Canada Revenue Agency calculates the maximum percentage you can withdraw from the LIF.

Now that you know a little bit more about the different savings vehicles that are available to you, it should be easier to ask questions when meeting with personal finance experts and to understand everything they have to offer.

Make the right choice

The FlexiFonds offering: retirement savings solutions

Are you looking to maximize or consolidate your retirement savings? The Fonds de solidarité FTQ has launched the FlexiFonds offering to meet your needs and support you throughout your retirement. Better yet, with these new products, you can continue to support Québec's economy! The FlexiFonds offering is the logical extension of your Fonds experience.


About FlexiFonds de solidarité FTQ
FlexiFonds de solidarité FTQ Inc. is a wholly-owned subsidiary of the Fonds de solidarité FTQ. FlexiFonds de solidarité FTQ Inc. acts as the principal distributor of the funds' units and is a mutual fund dealer registered with the Autorité des marchés financiers.

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About FlexiFonds de solidarité FTQ

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FlexiFonds de solidarité FTQ inc., a wholly owned subsidiary of the Fonds de solidarité FTQ, is a mutual fund dealer duly registered with the Autorité des marchés financiers. FlexiFonds de solidarité inc. acts as the principal distributor of the FlexiFonds funds and does not distribute the units of any other mutual fund.