A Life Income Fund (LIF) is the account that a Locked-In Retirement Account (LIRA) converts to at retirement. Like a RRIF, it requires minimum annual withdrawals — but unlike a RRIF, it also has a maximum annual withdrawal limit set by federal or provincial pension legislation.
How a LIF Works
When you convert a LIRA to a LIF, you begin drawing income subject to both a minimum and maximum withdrawal each year. The minimum follows RRIF rules. The maximum is determined by an actuarial formula based on your age and current interest rates. In most provinces you can convert some or all of a LIF to a life annuity at age 80.
Why It Matters in Retirement
The maximum withdrawal cap can constrain income flexibility if your LIF is a significant portion of your savings. Understanding the cap in advance allows you to plan other income sources around it.
Related Resources
This article provides general financial education for Canadians. It is not personalized financial advice. For guidance specific to your situation, consider speaking with a CFP professional.