Annuity vs RRIF in Canada: Guaranteed Cheques vs Flexible Control

By Jordan Ellis · Published August 21, 2026 · Reviewed September 14, 2026

Quick Answer

A life annuity converts savings into a guaranteed paycheque — roughly $6,000–$7,100 per year for life per $100,000 at age 65 (September 2026 quotes; rates vary with bond yields, age, sex, insurer and guarantees) — with zero investment risk but no flexibility and usually nothing left for heirs. A RRIF keeps your money invested and under your control but requires taxable minimum withdrawals starting the year after you open it, and no later than the year you turn 72 (5.28% of the balance if you were 71 on January 1, rising to 20% at 95). Most retirees are best served by a split: annuitize enough to cover fixed expenses CPP and OAS don't, RRIF the rest for flexibility and estate value.

You hit 71, the RRSP must become something, and the choice runs on a spectrum between two poles: buy certainty (annuity) or keep control (RRIF). Here’s how each pole actually behaves.

The annuity: a pension you buy yourself

Hand an insurance company $100,000 at 65 and they hand you back roughly $500–$590/month for life, depending on sex and insurer — contractually guaranteed, market-proof, sequence-of-returns-proof. The trade-offs:

Irreversible. Once bought, the capital is gone. No emergencies, no changes of mind.
Inflation erosion. A level payment buys noticeably less at 85. Inflation-indexed annuities exist but start considerably lower.
Nothing (or little) for heirs. Guarantee periods (10–20 years) and joint-life options protect a spouse but each protection trims the payout.
Rates are time-sensitive. Annuity pricing follows long bond yields, so quotes change often, and laddering purchases over a few years diversifies rate risk.

The RRIF: your RRSP, with a tap attached

The RRIF keeps everything invested as it was, with one new rule: minimum taxable withdrawals starting the year after conversion — 5.28% at 71, climbing to 20% at 95+. The trade-offs:

Full control and estate value. Change investments, take extra when needed, leave the remainder.
Market risk is yours. A bad first decade plus forced withdrawals can deplete the fund — the exact risk the annuity eliminates.
Minimums are a floor, not a ceiling. At 85 you’re forced to pull 8.51% whether you need it or not, all taxable. Plan the extra tax into your retirement income model.

The strategy that usually wins: split it

All-annuity sacrifices your estate and flexibility; all-RRIF leaves you exposed to a bad market at 80. The textbook move:

Add up fixed essential expenses — housing, food, utilities, insurance.
Subtract CPP + OAS (check your numbers with the CPP & OAS calculator).
Annuitize just enough to close that gap. Essentials are now covered for life no matter what markets do.
RRIF the rest for travel, gifts, inflation protection, and the estate.

One more lever: elect your younger spouse’s age for RRIF minimums before the first withdrawal — it permanently lowers forced taxable income. And model the whole drawdown with the retirement calculator before committing; the annuity quote will wait a week, and the decision lasts thirty years.

Official sources

Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed September 14, 2026.

Registered Retirement Income Fund (RRIF) (Canada Revenue Agency)
OAS pension recovery tax (clawback) (Employment and Social Development Canada)

Frequently Asked Questions

How much does a $100,000 annuity pay in Canada?

In September 2026 quotes, a 65-year-old buying a single life annuity with $100,000 of registered money was offered roughly $545–$590 a month (men) or $505–$565 a month (women) with no guarantee period, about $6,000–$7,100 a year. Women receive less because of longer life expectancy, longer guarantee periods trim the payout, and waiting until you're older raises it. Rates move with long-term bond yields, so quotes change often.

What are the RRIF minimum withdrawal rates?

Based on your age on January 1 of the withdrawal year: 5.28% at 71, 5.40% at 72, 5.82% at 75, 6.82% at 80, 8.51% at 85, 11.92% at 90, and 20% at 95 and beyond. You can use the younger spouse's age to shrink the minimum — one of the simplest RRIF optimizations available.

When do I have to convert my RRSP to a RRIF or annuity?

By December 31 of the year you turn 71. Your options: convert to a RRIF, buy an annuity, or cash out (a massive tax hit — almost never the answer). You can convert earlier, and partial conversions are allowed.

Which is better for leaving money to heirs?

The RRIF, clearly. Remaining RRIF value passes to your estate (tax-deferred to a spouse, taxed on death otherwise). A standard life annuity dies with you — that is the price of the longevity insurance. Guarantee periods and joint-life options soften this but reduce the monthly payout.

Are annuity payments and RRIF withdrawals taxed?

Both are fully taxable as income in the year received. Both qualify as eligible pension income for the $2,000 pension income credit, and both can be split with a spouse — up to 50% — starting at 65, which is often worth thousands a year to a one-income couple.