Why might someone prefer an RRIF over an RRSP when anticipating needing retirement income?

Choosing an RRIF (Registered Retirement Income Fund) over an RRSP (Registered Retirement Savings Plan) can be particularly beneficial for someone focused on securing retirement income. An essential feature of an RRIF is that it mandates minimum withdrawals each year. This aspect is critical for retirees who need to ensure they are drawing an income from their retirement savings.

The requirement for mandatory withdrawals from an RRIF provides a structured approach to income distribution, which can be advantageous in managing finances during retirement. This ensures that the retiree is regularly accessing their funds for living expenses, rather than allowing the account to grow indefinitely and potentially lead to a larger tax burden in the future.

It’s important to highlight that while there are other considerations, such as withdrawal options and limits, the aspect of mandatory withdrawals specifically addresses the intent to utilize retirement savings for income, making the RRIF a more suitable choice for those needing accessible funds during retirement.