How to consolidate your registered accounts for retirement income in Canada + MORE Oct 1st

Ask MoneySense
My wife has an RRSP in her name and a spousal RRSP in her name, plus a small LIRA. She will be turning 71 next year.

My question is: Can she open a RRIF account and contribute both of her RRSPs plus the LIRA amount into one single RRIF account without incurring any taxable consequences?

—Steve

Consolidating registered accounts

As you know, Steve, your wife must make some decisions about her registered accounts by the end of next year because of her age. It seems like a good time to consider consolidation of her accounts. In some cases, this is possible, but it’s not always. So, I will clarify the rules generally as well as how they may apply to her situation.

Before you convert RRSPs to RRIFs

When you have a registered retirement savings plan (RRSP), you can only keep it open until December 31 of the year you turn 71. By that deadline, you must choose from these three options:

Cash in the account.

Buy an annuity from a life insurance company…

There are plenty of ways to spend smarter and save money, like the 50-30-20 rule, automating savings, opening a tax-free savings account (TFSA) and maximizing loyalty rewards programs. But a not-so-new concept among eco-warriors is now taking TikTok by storm: #underconsumptioncore. The idea is simple and it rejects the excessive product consumption that’s dominated social media for years. You only buy what you need—nothing superfluous—and use it until it’s completely gone or no longer functional (more on that last part in a bit).

Gen Zs and young millennials are jumping on the trend for a number of reasons. They are denouncing the influencer culture of must-buy products on their social feeds, which can be problematic for many reasons. Plus, it’s better for the planet, and it saves you money, too. More mindful, more demure, you might say.

Known as “underconsumption core,” the budgeting strategy is just “recession core” rebranded. Even if it is a movement to spend less in a difficult economy—and the planet gets a boost too—who cares what it’s called…

With the high cost of living taking a big bite out of Canadians’ disposable income, it can seem challenging to put away any savings. But the right financial tools—such as a high-interest savings account (HISA) and tax-sheltered registered accounts—can help you keep working toward your financial goals and even grow your money, whatever stage of life you’re in.

Average savings by age in Canada 

Canadians aren’t doing too badly when it comes to average savings, socking away funds both inside and outside of registered retirement savings plans (RRSPs). According to Statistics Canada data from 2019 (the most recent information available), we’ve saved this much on average, not including private pensions and non-financial assets like real estate:

Under age 35: $27,425 in non-pension financial assets and $9,905 in RRSPs

Ages 35 to 44: $23,743 in non-pension financial assets and $15,993 in RRSPs

Ages 45 to 54: $39,831 in non-pension financial assets and $41,998 in RRSPs

That was a few years ago…