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Live Long and Prosper? Mandatory RRIF Drawdowns Raise the Risk of Outliving Tax-Deferred Saving

Commentary - C.D. Howe Institute, 2023-04 (641), p.0_1-12

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Title:
Live Long and Prosper? Mandatory RRIF Drawdowns Raise the Risk of Outliving Tax-Deferred Saving
Author: Robson, William B P ; Laurin, Alexandre
Subjects: Age ; Charitable foundations ; Defined contribution plans ; Income funds ; Income Tax Act-Canada ; Pension plans ; Rates of return ; Retirement income
Is Part Of: Commentary - C.D. Howe Institute, 2023-04 (641), p.0_1-12
Description: Tax rules requiring RRIF withdrawals need revamping. Longer lives and lower returns increase the likelihood that mandatory minimum withdrawals will leave seniors with negligible income from their tax-deferred saving in their later years.Government impatience for revenue should not force holders of RRIFs and similar tax-deferred vehicles to deplete their nest eggs prematurely. We need to ensure that minimum withdrawals and the ages at which saving must stop and withdrawals must start reflect updated demographic and economic realities.The complexities of formula-based approaches and frequent updates suggest more far-reaching approaches, including abolishing age limits and minimum withdrawals altogether. Another withdrawal-reform option would eliminate the requirement to withdraw amounts below a certain threshold value - say $8,500 - to avoid premature depletion of nest eggs.
Publisher: C.D. Howe Institute
Language: English
Identifier: ISSN: 0824-8001
EISSN: 1703-0765
Source: ProQuest Central

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