Association says people deserve to be in control of retirement savings during global pandemic crisis
An association representing Canadian seniors has urged the federal government to temporarily suspend mandatory RRIF withdrawals during the COVID-19 pandemic.
CARP says the economic crisis sparked by the virus outbreak has left members deeply fearful for their financial security. Many are concerned about the impact on the retirement savings caused by declining markets and projected losses for an extended and unpredictable period of time.
“This issue is compounded by the fact that seniors are living longer than ever before, and many depend on their RRIF to provide sustained income throughout their later years,” a CARP statement said. “Seniors deserve to be in control of their retirement savings, especially during a global crisis like the COVID-19 pandemic.”
The association said that while part of the federal government’s economic response to COVID-19 is to reduce the minimum RRIF withdrawal requirement by 25% for 2020, many seniors would rather leave their RRIF untouched at a time when markets are so volatile. Of course, many seniors have no ability to earn back this income due to loss of wages during the pandemic.
CARP, therefore, implored the federal government to temporarily suspend mandatory RRIF withdrawals to protect the financial security of our seniors and added that more than 3 in 4 of its members support this change. It added that the main problem with mandatory RRIF withdrawals is that, once Canadians turn 71, they must convert their RRSPs to RRIFs and begin making mandatory withdrawals at a set rate.
“These rules do not reflect increasing life expectancies, and much shorter time spent in retirement, as people are working longer than ever before. When individuals are forced to draw down on their savings, they risk outliving their funds. This problem is compounded by lower rates of return, declines in personal savings rates, and reduced access to workplace pension plans.
“Suspending mandatory RRIF withdrawals is a tangible action that the federal government can take to immediately lessen the threat COVID-19 poses to the financial security of Canada’s retirees.”
