Making the most of retirement income for 2010

Work Pensions

Choosing the right option – The choice between whether your spouse will receive any or a certain percent of your pension benefits needs careful consideration.  Basically it is a life insurance decision and it might make more sense to buy that privately rather than from your pension.  Seek professional advice.


You have set aside funds into RRSPs to finance your retirement, deferring taxes until that time.  Since 2007, these savings (RRSPs) must be converted to an income producing RRIF by the end of the year in which you turn 71.

Tax Tip–Convert at least $2,000 of your RRSPs at age 65 to take advantage of the pension credit and pension income splitting with your spouse.


How much to withdraw?  A minimum amount must be withdrawn from the RRIF annually.  Monthly or annual withdrawals are possible. Amounts in excess of this minimum will have income tax withheld.

Beware of the RRSP/RRIF time bomb! Although they may be transferred to a spouse without tax consequences at death, retirement funds are fully taxable upon the death of the second spouse.  If there is $300,000.00 left in a registered plan, this amount will be included as income in the year of death and taxes at whatever marginal rate this fall in. (Ouch!)

Pension Sharing

New since 2007 is the ability for pensioners to split their pension for tax purposes with a spouse.  The tax savings could be considerable.  It is advisable to have a tax professional assist with determining the optimum savings from this provision.

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