Which Investments Make Sense at Age 70? What to Know in Canada

How Can You Manage Mandatory RRIF Withdrawals and Tax Implications?

Canadians must convert their Registered Retirement Savings Plans (RRSPs) to Registered Retirement Income Funds (RRIFs) by December 31 of the year they turn 71. Once converted, mandatory minimum withdrawals begin, calculated as a percentage of the account value at the start of each year. At age 70, if you’ve already converted, the required withdrawal is approximately 5% of your RRIF balance, increasing gradually each year.

These withdrawals count as taxable income, potentially pushing you into higher tax brackets. Strategic planning involves spreading withdrawals across multiple years when possible, coordinating with other income sources like Canada Pension Plan (CPP) and Old Age Security (OAS) to minimize overall tax burden. Consider withdrawing only the minimum required unless you need additional funds, and be mindful that excessive income can trigger OAS clawbacks, which begin when net income exceeds approximately $86,912 for 2024.

Working with a financial advisor or tax professional helps optimize withdrawal timing and amounts. Some retirees benefit from income splitting strategies with spouses or using RRIF funds to top up Tax-Free Savings Accounts (TFSAs) when room permits, creating future tax-free growth opportunities.

What Asset Allocation Minimizes Market Risk While Combating Inflation?

At 70, protecting capital becomes paramount, but completely avoiding growth assets may leave portfolios vulnerable to inflation erosion. A balanced approach typically involves reducing equity exposure compared to younger years while maintaining enough growth potential to preserve purchasing power over potentially 20-30 years of retirement.

Conservative portfolios for this age group often allocate 30-40% to equities and 60-70% to fixed income and cash equivalents. Within equities, focus shifts toward dividend-paying stocks, particularly Canadian companies with strong track records of consistent payouts. These provide both income and modest growth potential. The fixed income portion should include government bonds, high-quality corporate bonds, and Guaranteed Investment Certificates (GICs) with staggered maturity dates to manage interest rate risk.

Inflation protection requires maintaining some exposure to assets that historically outpace rising prices. Real return bonds, inflation-indexed GICs, and select equity positions in sectors like utilities and consumer staples can help. Regularly rebalancing ensures your allocation doesn’t drift too far from target percentages as market values fluctuate.

How Can TFSAs Reduce Tax Burdens in Retirement?

Tax-Free Savings Accounts offer exceptional flexibility for retirees. Unlike RRIFs, TFSAs have no mandatory withdrawals, and all investment income and capital gains grow tax-free. Withdrawals don’t count as taxable income, making them ideal for managing annual income levels to avoid OAS clawbacks or staying in lower tax brackets.

For 70-year-olds, maximizing TFSA contributions creates a valuable tax shelter. The cumulative contribution limit for someone who has been eligible since TFSAs began in 2009 and never contributed would be $95,000 as of 2024. Retirees can use RRIF withdrawals to fund TFSA contributions up to their available room, effectively converting taxable assets into tax-free ones over time.

TFSAs work well for holding higher-growth investments since gains won’t trigger tax consequences. They also provide emergency funds without tax penalties, and amounts withdrawn can be re-contributed in future years. For estate planning, TFSAs pass to beneficiaries tax-free, unlike RRIFs which are fully taxable upon death unless transferred to a spouse.

Which Canadian Dividend Stocks Provide Reliable Monthly Income?

Dividend-focused investing suits retirees seeking regular income streams. Canadian banks, utilities, telecommunications companies, and real estate investment trusts (REITs) traditionally offer dependable dividends, though payment frequencies vary.

Major Canadian banks like Royal Bank of Canada, Toronto-Dominion Bank, and Bank of Nova Scotia have decades-long histories of quarterly dividend payments and gradual increases. These financial institutions benefit from diversified revenue streams and strong regulatory frameworks. Utility companies such as Fortis Inc. and Emera Inc. provide essential services with regulated returns, supporting consistent dividend policies.

For monthly income specifically, Canadian REITs and certain corporate structures distribute payments more frequently. Examples include RioCan REIT and Canadian Apartment Properties REIT, which own income-producing real estate. Telecommunications giants like BCE Inc. and Telus Corporation pay quarterly dividends with competitive yields.

Dividends from Canadian corporations held in non-registered accounts receive favorable tax treatment through the dividend tax credit, making them more tax-efficient than interest income. However, diversification remains crucial—avoid overconcentration in any single sector or company, regardless of dividend history.

What Are the Advantages of GICs and Government Bonds for Capital Preservation?

Guaranteed Investment Certificates and government bonds form the foundation of conservative retirement portfolios, offering capital protection and predictable returns. GICs are issued by Canadian banks and credit unions, guaranteeing both principal and interest if held to maturity. They’re protected by the Canada Deposit Insurance Corporation (CDIC) up to $100,000 per category per institution, providing security against institutional failure.

GIC terms range from 30 days to 10 years, with longer terms typically offering higher interest rates. Current rates fluctuate with Bank of Canada policy but have been notably higher in recent years compared to the previous decade. Laddering GICs—purchasing certificates with staggered maturity dates—provides regular access to funds while capturing different interest rate environments.

Government of Canada bonds carry the full backing of the federal government, considered virtually risk-free for credit purposes. They’re available in various terms and can be bought directly or through mutual funds and ETFs. Provincial bonds offer slightly higher yields with marginally increased risk. Real Return Bonds, issued by the federal government, adjust for inflation, protecting purchasing power.

Both GICs and government bonds generate interest income, which is fully taxable at your marginal rate when held outside registered accounts. Consider holding these in RRIFs or TFSAs to minimize tax impact. The trade-off for safety is typically lower returns compared to equities over long periods, making them suitable for the portion of your portfolio designated for stability rather than growth.

Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.

Building a Sustainable Investment Strategy at 70

Constructing an investment approach at age 70 requires balancing multiple priorities: generating sufficient income to maintain lifestyle, preserving capital against market downturns, managing tax obligations efficiently, and ensuring assets last throughout retirement. This involves regular portfolio reviews, staying informed about changing tax rules and government benefits, and remaining flexible as personal circumstances evolve.

Consider your complete financial picture, including pension income, government benefits, and expected expenses. Risk tolerance naturally decreases with age, but individual circumstances vary widely—someone with substantial pension income may afford more investment risk than someone relying primarily on portfolio withdrawals.

Professional guidance becomes increasingly valuable at this stage. Certified financial planners, tax advisors, and estate planning lawyers can help navigate complex decisions around withdrawals, tax optimization, and wealth transfer. Regular reviews ensure your strategy adapts to changing markets, personal health considerations, and family needs while maintaining the security and income generation essential for this life stage.