For those approaching retirement, it's time to think about how you're going to draw income from your hard-earned savings in a way that's best for you.
Below you can review the advantages and disadvantages of various retirement income options. You can use this information to help you select the option – or combination of options – that works best for you. For example, combining a RRIF and an annuity gives you both income flexibility and security.
Comparing income options
Annuities
| Advantages | Disadvantages |
| Easy to manage | Income depends on interest rate at time of purchase |
| Certainty of income payments | No investment flexibility |
| Inflation may erode purchasing power | |
| With term annuities, holder may outlive income | |
| With life annuities, heirs won’t receive benefit | |
| Options for dealing with disadvantages come at additional cost |
Registered Retirement Income Funds (RRIFs)
| Advantages | Disadvantages |
| Investment flexibility | Can be complex |
| Control over investments | Income level depends on investment success |
| Tax-sheltered compound growth | Minimum withdrawal required |
| Withdrawal flexibility |
Life Income Funds (LIFs)
| Advantages | Disadvantages |
| Investment flexibility | Minimum withdrawal required |
| Control over investments | Maximum withdrawal limit |
| Tax-sheltered compound growth | May have to convert to annuity at age 80 |
| Some withdrawal flexibility | Income level depends on investment success |
Locked-in Retirement Income Funds (LRIFs)
| Advantages | Disadvantages |
| Investment flexibility | Minimum withdrawal required |
| Control over investments | Maximum withdrawal limit |
| Tax-sheltered compound growth | Cannot cash out the whole plan |
| More flexible than a LIF | Income level depends on investment success |