The federal government hasn’t yet announced a date for the 2026 budget.Adrian Wyld/The Canadian Press
Several wealth management industry associations are asking Ottawa to allow Canadians to contribute to their registered retirement savings plans (RRSPs) for longer before having to convert them into registered retirement income funds (RRIFs).
Stuart Dollar, tax advisor with the Conference for Advanced Life Underwriting (CALU), says giving Canadians more time to contribute to their RRSPs before they’re converted to RRIFs would help ensure their money lasts through a longer retirement.
Specifically, CALU made the recommendation to extend the conversion age to 75 in its submission to the Department of Finance’s prebudget consultation last month.
The federal government hasn’t yet announced the date of the 2026 budget. Last year’s budget, which was the first under the new system of tabling a budget in the fall instead of the spring, was released on Nov. 4, 2025.
Currently, an RRSP holder must convert their plan into a RRIF (or use RRSP funds to buy an annuity or withdraw them as taxable income) by the end of the year in which they turn 71.
The following year, RRIF holders must begin withdrawing a minimum percentage amount annually, with the percentage rate increasing each year based on a schedule.
In prebudget submissions to the federal government, various industry groups said the current age-71 conversion threshold is too young to account for today’s longer lifespans.
The Canadian Forum for Financial Markets (CFFiM) argued that increasing the RRSP-to-RRIF conversion age by three years, to 74, would account for Canadians’ longer expected retirements relative to previous generations.
Laura Paglia, president and chief executive officer of the CFFiM, said in an e-mail to The Globe that “longevity and retirement patterns have changed.”
Citing data from Statistics Canada, the CFFIM said life expectancy at 74 today (13.95 years) is roughly equivalent to what life expectancy at 71 was in 1992 (13.73 years), which is when the modern RRIF withdrawal calculation was set.
Mr. Dollar says that with the increasing cost of living, Canadians may not have the financial flexibility to make use of RRSP contribution room. Raising the conversion age would give more time to carry forward any unused contribution room and boost retirement savings.
Mandatory annual RRIF withdrawals can also push seniors into higher tax brackets and put them at risk of losing access to age-related government benefits, including old-age security, Mr. Dollar says.
The current age-71 conversion threshold, therefore, can disincentivize seniors from earning employment income even if they still want to work, he says.
The Securities and Investment Management Association (SIMA) argues that raising the conversion age to 73 would give seniors more financial independence.
In a briefing note prepared following a prebudget consultation roundtable, SIMA gave the example of a 71-year-old widow with $31,000 in pension income and $350,000 in an RRSP, earning 5 per cent a year. Her marginal tax rate is 25 per cent.
Under current rules, the woman converts her RRSP to a RRIF at the age of 71 and starts mandatory withdrawals at 72, even though she doesn’t need the extra income yet.
After two years, her RRSP balance would decrease to approximately $345,000, accounting for both earnings and $40,000 in withdrawals on which taxes are paid.
If the conversion age were 73, the woman could keep her savings invested for two more years and contribute $7,000 annually to the RRSP. With a 5-per-cent return, her RRSP would grow to approximately $400,000, or $55,000 more than it would be under the current rules.
“The change would allow [the woman] to maintain her tax-protected savings for longer, giving her greater flexibility, stability and control over her retirement income,” SIMA’s briefing note stated.
Wealth management industry groups have long pushed for raising the RRIF conversion age, so far without success. During the 2025 federal election campaign, the Conservatives proposed raising the conversion age to 73, a move that SIMA endorsed.
If Ottawa were to raise the conversion age, the federal government would have to wait longer to tax RRIF income, representing a potential loss in revenue.
However, the industry groups argued the government would get to tax RRIF income eventually when the holder withdraws amounts voluntarily or dies.
Other RRSP/RRIF recommendations
CALU recommends RRIF holders be allowed to exclude up to $180,000 (indexed) from RRIF minimum withdrawals until they turn 85. Meanwhile, SIMA recommends that Canadians who have RRIFs with less than $200,000 be allowed to opt out of mandatory minimums after the age of 71.
CALU also recommends that unused RRSP contribution room be indexed to inflation.
The CFFiM recommends increasing the annual RRSP contribution limit to 30 per cent of earned income (to a maximum amount), up from 18 per cent currently, and reducing and eventually eliminating mandatory RRIF minimums.