Ep 184 - Five Things to do with RRIF Minimums You Don’t Need
Many Canadian retirees are surprised when their RRIF minimum withdrawals create more income than they actually need. In this episode, Joe Curry shares five smart strategies for using excess RRIF withdrawals - from boosting tax-free savings with TFSAs to helping family, funding lifestyle upgrades, and supporting charitable causes in a tax-efficient retirement plan.
Key Takeaways
Use RRIF withdrawals to build tax-free wealth.
If you don’t need the income, redirect it into your TFSA (or your spouse’s) to allow the money to grow completely tax-free going forward.
Create a future health and independence fund.
Setting aside extra RRIF income in a dedicated investment account can help fund future care needs, private retirement living, or home accessibility upgrades.
Turn “grumpy money” into guilt-free lifestyle upgrades.
Forced withdrawals can actually enhance your retirement — whether through travel, experiences with family, or upgrades that improve daily life.
Support family when it matters most.
Helping children or grandchildren today — through RESP contributions, TFSA gifts, or mortgage support — can have a bigger impact than leaving a larger inheritance later.
Pair RRIF withdrawals with charitable giving.
Strategic charitable donations, including gifting appreciated securities, can reduce taxes while supporting the causes that matter most to you.
Insights Worth Sharing
“Just because the government forces money out of your RRIF doesn’t mean it has to sit in a chequing account.”
“Turn your RRIF withdrawals from ‘grumpy money’ into guilt-free lifestyle upgrades.”
“If you don’t spend the money, someone else eventually will.”
“You control what happens to your RRIF withdrawals once they leave the account.”
“Done well, RRIF withdrawals can help family, reduce taxes, and align your money with your values.”
Five Smart Ways to Use RRIF Withdrawals You Don’t Actually Need
Many Canadians spend decades building their retirement savings inside RRSPs, enjoying tax-deferred growth along the way. But once you convert those savings into a RRIF, the government requires you to start taking minimum withdrawals each year.
For some retirees, those RRIF minimums create more income than they actually need. That leads to a common question I hear from clients: “What should I do with this extra money?” If that sounds familiar, here are five practical ways to turn forced RRIF withdrawals into opportunities within your retirement income plan.
1. Build Tax-Free Wealth Using Your TFSA
The first place to look is your Tax-Free Savings Account (TFSA). Once your RRIF withdrawal is taxed, you can reinvest the after-tax money inside your TFSA where it grows tax-free. If you have a spouse, consider topping up both accounts. This effectively moves money from a fully taxable environment into one that’s completely tax-free going forward - a simple but powerful retirement tax strategy.
2. Create a Future Health and Independence Fund
Many retirees worry about the potential cost of healthcare, long-term care, or private retirement living. Instead of letting excess RRIF withdrawals sit idle, consider investing them in a dedicated health and independence fund. This pool of money can help pay for home modifications, in-home care, or a higher-quality retirement residence if needed. Having that cushion often provides peace of mind — and more control over future care decisions.
3. Turn “Grumpy Money” into Lifestyle Upgrades
A lot of retirees feel frustrated by RRIF withdrawals because they’d prefer to keep the money invested. I call this “grumpy money.” But if your retirement plan shows that you already have more than enough income, those withdrawals can actually enhance your lifestyle. Maybe it’s travelling more often, flying business class instead of economy, renovating something around the house that’s always bothered you, or creating memorable experiences with your children and grandchildren. If the plan supports it, there’s nothing wrong with enjoying the money you worked hard to earn.
4. Help Family When It Matters Most
Another powerful option is helping family members while you’re still around to see the impact.
That might include:
Contributing to a grandchild’s RESP
Helping your children top up their TFSAs
Providing support toward a mortgage or education costs
Often, this support can make a bigger difference today than an inheritance decades in the future. The key is making sure it fits comfortably within your own retirement income strategy.
5. Pair RRIF Withdrawals with Charitable Giving
If charitable giving is important to you, RRIF withdrawals can help fund those donations in a tax-efficient way. Some retirees give cash annually that aligns with their withdrawals. Others donate appreciated securities, which allows them to avoid capital gains tax while receiving a full charitable tax receipt. Either way, it’s a meaningful way to align your finances with your values.
The Bottom Line
The government may control how much comes out of your RRIF, but you still control what happens to that money next. With thoughtful planning, excess withdrawals can strengthen your tax strategy, support your family, improve your lifestyle, and help the causes you care about.
Learn more about our retirement planning process at MatthewsAndAssociates.ca.