Ian Moyer Logo

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Tags
    Tags Displays a list of tags that have been used in the blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Team Blogs
    Team Blogs Find your favorite team blogs here.
  • Login
    Login Login form

Are you withdrawing income payments from a RRIF portfolio?

Posted by on in News
  • Font size: Larger Smaller
  • Hits: 2391
  • 0 Comments
  • Subscribe to this entry
  • Print

Saving in Your Accumulation Years

iStock_000018204913_ExtraSmall.jpg

The three scenarios shown below all have an assumed compound return of 7%. The examples below are for illustrative purposes only.  Situations will vary according to specific circumstances.

 

If you start out with $100,000 and leave it invested, regardless of how the returns actually fall out through the years, everything else being equal, the resulting capital is the same.

 

 

 

 

 

Scenario Year Compound
Return
Balance
1 2 3 4 5 6 7 8 9 10
1 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% $196,715
2 9.9% 14% 13% 23% -4% 10% -1% 21% -4% -7% 7% $196,715
3 -7% -4% 21% -1% 10% -4% 23% 13% 14% 9.9% 7% $196,715

RRIF Withdrawals at 7%

Now if you start a RRIF portfolio with $100,000 and withdrawals are being made, the order of investment returns has a significant impact on your assets. The table below assumes that we are withdrawing from our asset at a rate of $7000 per year. In theory, if we withdraw at a rate of 7% and earn a 7% rate of return, our capital will stay in-tact. This is true if the returns fall out evenly but not if we are using variable portfolios.

 

Scenario Year Return Balance
1 2 3 4 5 6 7 8 9 10
1 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% $100,000
2 9.9% 14% 13% 23% -4% 10% -1% 21% -4% -7% 7% $112,528
3 -7% -4% 21% -1% 10% -4% 23% 13% 14% 9.9% 7% $83,586

 

The difference between the second and third withdrawal scenario is $28,942 or 35% despite the fact that each investment scenario generates a 7% annualized return. What this tells us is that there is a great amount of care that needs to be taken in setting up the portfolio and determining how and from which investments the income will be withdrawn.

Ask us how we can help you manage your RRIF to meet your retirement planning needs.

0

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest
Guest Tuesday, 18 December 2018

Contact Information

 

Phone: 1 519 485 5801

Toll Free: 1 800 565 5444

hello@ianmoyer.com
Fax: 1 519 425 1207

Follow Us

© 2012 Ian C. Moyer All Rights Reserved - Website Designed by Akira Studio Ltd.

Facebook

Twitter