This 31-year-old is about to finish her PhD. Making $60,000 a year, she’s hoping to buy a bigger place and have a child. How can she start? + MORE Oct 10th

Many retirees have the bulk of their retirement savings in registered retirement savings plans (RRSPs) or similar tax-deferred registered accounts. RRSPs need to be used to buy an annuity or more commonly converted to a registered retirement income fund (RRIF) by Dec. 31 of the year someone turns 71. Required RRIF withdrawals begin the next year, with each withdrawal based on a percentage of the account value. 

Locked-in RRSPs, defined contributions (DC) pensions, and deferred profit sharing plans (DPSPs) all have the same rule requiring conversion at age 71. 

The two big questions for a retiree prior to age 71 are: When should I start withdrawals? And how much should I take out each year?

If we take a simplistic approach to the RRSP drawdown, a sustainable withdrawal rate may be 2% to 5% of the account value. That is, between 2% and 5% of the starting account value may be withdrawn each year with subsequent withdrawals increased each year with inflation for life. There are many asterisks depending on age, life expectancy, investment risk tolerance, investment fees and other factors…

A dedicated and frugal saver, U of T graduate student Cecily has amassed significant savings along with substantial equity in a downtown condo. Her goal is to stay on track financially as her life moves to a new stage.

A dedicated and frugal saver, U of T graduate student Cecily has amassed significant savings along with substantial equity in a downtown condo. Her goal is to stay on track financially as her life moves to a new stage.

Q. I’m planning to take a break from university until I can move into my own place and support myself through school. I’ve already taken three years of classes, which I paid for through a mixture of loans, grants, and my Registered Education Savings Plan—which my parents set up and contributed to while I was growing up. I know it’s legal for them to dictate what I take from the RESP, but is there any situation in which I would be legally required to pay that money back to them?–Barbara

A. Great question, Barbara. Because your parents are the subscribers of the RESP—meaning they set up the account for you and made the contributions—the money is legally theirs until they pass it over to you, the beneficiary. But once the money is in your hands it is legally yours and you don’t have to pay it back to them.

There are, however, a few other things you and your parents should keep in mind about your RESP funds, especially given your plan to pause your studies.

As you may recall, during the first semester of your first year of university, you were allowed to draw a maximum of $5,000 in Educational Assistance Payments (EAP), which includes the government grants paid into the RESP and any interest or investment growth on the RESP savings…