A 72-year-old client holds a significant portion of their retirement assets in a RRIF. They are concerned about potential longevity risk and want to ensure their income lasts throughout their extended lifespan, while also considering their estate planning goals. Which of the following decumulation strategies best balances longevity protection with flexibility for potential beneficiaries?

Question: A 72-year-old client holds a significant portion of their retirement assets in a RRIF. They are concerned about potential longevity risk and want to ensure their income lasts throughout their extended lifespan, while also considering their estate planning goals. Which of the following decumulation strategies best balances longevity protection with flexibility for potential beneficiaries?

Answer options: ✅ A systematic withdrawal plan combining RRIF minimums with discretionary withdrawals, alongside the purchase of a deferred life annuity with a guaranteed period within the RRIF.

• Withdrawing only the RRIF minimum each year and investing the surplus in a non-registered account to maintain maximum capital within the RRIF.
• Converting a substantial portion of the RRIF to a prescribed annuity at age 72, ensuring a fixed payment for life with no beneficiary flexibility.
• Aggressively investing the RRIF in high-growth equities to outpace inflation and minimize withdrawals, aiming for a large estate at the expense of guaranteed income.

Correct answer: A systematic withdrawal plan combining RRIF minimums with discretionary withdrawals, alongside the purchase of a deferred life annuity with a guaranteed period within the RRIF.

Explanation: Combining RRIF minimums with a deferred life annuity (possibly purchased within the RRIF if permitted) provides guaranteed income later in life to combat longevity risk, while the remaining RRIF assets offer flexibility for discretionary withdrawals and estate planning through named beneficiaries. The guaranteed period on the annuity ensures some payments to beneficiaries even if death occurs prematurely. This strategy offers a balanced approach.