RRIF vs Annuity Calculator Canada

What the RRIF vs annuity calculator does

The calculator runs one pot of registered capital down two ways. In a RRIF the money stays yours, earns a return and pays out at least the statutory minimum each year, with whatever is left going to your estate. In an annuity the money goes to an insurer in exchange for a payment every year for life, which stops when you do. It reports the income, estate value and after-tax total for each.

An RRSP must be wound up by the end of the year you turn 71: cash it out, convert to a RRIF or buy an annuity. Almost nobody cashes out, so the decision is between the other two.

The trade being made

An annuity buys certainty with the estate. The insurer can pay more each year than a RRIF minimum because it returns your capital along with the return on it, and pools longevity so those who die early fund those who live long. That mortality credit grows the longer you live, and a RRIF cannot replicate it.

What you give up is control and residual value. Once the premium is paid, the capital is gone: you cannot draw extra for a roof or a car, cannot change your mind, and, outside a guarantee period, nothing is left when you die.

A RRIF keeps all that: your investments, extra withdrawals when you want them, and a balance that is still an asset. It gives no guarantee, so if markets disappoint and you live to 95 the RRIF can run thin just when an annuity would still be paying in full.

A worked example

Take $500,000 at 71, planning to age 90, with a 4.5% RRIF return, an annuity quote of 7.2% with a ten-year guarantee, a 30% tax rate while alive and 45% on the estate. The annuity pays $36,000 a year, $684,000 in total and about $478,800 after tax, with nothing left at the end. Taking only RRIF minimums starts at $26,400 a year and pays about $558,654 in total, with about $274,232 left at 90, about $150,827 after estate tax. In total the RRIF leaves about $541,885 after tax, about $63,085 more than the annuity on these assumptions.

How the projection works

For the RRIF, the CRA prescribed factor for your age is applied to the balance at the start of each year, that amount comes out, and the rest earns your return. The factors are a stored parameter. Below the first age in the table the statutory formula applies: the balance divided by 90 minus your age.

You can also set the RRIF to pay the same income as the annuity rather than the minimum. That puts identical money in your hand each year and shows which route runs out first, a fairer comparison if what you want is a given standard of living. Run it both ways.

The annuity side applies the quoted payout rate to the premium every year of the projection, and if death falls inside the guarantee period the unpaid guaranteed payments are added to the estate.

Tax, and why the estate rate is higher

Both routes pay ordinary income tax on everything received. The difference is at the end: a RRIF balance left to anyone other than a spouse or partner is included in income on the final return in one year, often in the top bracket, so the estate rate is set separately and defaults higher. A commuted annuity guarantee paid to an estate is taxed the same way, so the same rate applies to both.

With a surviving spouse a RRIF can roll over tax-deferred with no tax at the first death. The calculator does not model that, so it understates the RRIF where a spouse is named as successor annuitant.

Reading the result

Change one thing at a time. Push the planning age out five years and the annuity closes the gap, since the case for annuitizing is living longer than expected. Lower the RRIF return by two points and it closes faster. Raise the estate tax rate and the annuity improves. If the totals are close, the choice is less financial than personal: a payment that cannot stop or a balance that is still yours.

What this calculator does not do

It does not model indexed or joint-and-survivor annuities, a spousal RRIF rollover, the OAS recovery tax that higher withdrawals can trigger, or year-to-year return swings, including a run of poor early returns, the main risk a RRIF carries. It does not price the annuity or check the insurer’s terms.

All figures are estimates based on the capital, ages, rates and tax rates you enter, and this page is not financial, tax or retirement advice. Get a current annuity quote and speak to an adviser before converting registered capital.

About This Tool: RRIF vs Annuity

RRIF vs annuity: use this tool to get an instant, accurate estimate. The figures follow official CRA guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.