Donor Story: How one retired couple turned their RRIF into a lasting charitable legacy

For many Canadians, retirement represents the opportunity to enjoy the rewards of decades of hard work. It’s also a time to reflect on the values they hope to pass on to future generations and the legacy they want to leave behind.

For Canada Gives donor clients John and Dianne, philanthropy became an increasingly important part of that legacy.

After spending more than 35 years owning and operating several franchises of a national retail chain, the couple built a successful business, raised a family and accumulated a sizeable retirement portfolio. As their business grew, so too did their desire to give back. They became active supporters of several charitable organizations, believing that sharing their success with others was just as important as achieving it.

Today, John is 72 and Dianne is 70. Their children are adults with families of their own, and one of John and Dianne’s greatest joys is seeing the next generation embrace many of the same values that guided them throughout their lives.

“We always wanted our children to understand that giving back is a responsibility as much as it is a privilege,” John says. “We wanted philanthropy to become part of our family’s story.”

Like many successful retirees, however, they encountered a challenge they hadn’t anticipated.

An often-overlooked tax planning opportunity

Over the years, John and Dianne diligently contributed to their Registered Retirement Savings Plans (RRSPs). By the time they retired, those accounts had grown substantially, providing an important source of financial security.

Starting in the year John turned 72, his RRSP was required to convert to a Registered Retirement Income Fund (RRIF), triggering mandatory annual minimum withdrawals. There was just one problem: the couple didn’t actually need the additional income.

Between their investments, Canada Pension Plan, Old Age Security and other retirement assets, John and Dianne were comfortably meeting their lifestyle needs. Instead of providing financial flexibility, the mandatory RRIF withdrawals simply increased their taxable income each year.

As many retirees are reminded, registered retirement savings are eventually taxed as ordinary income when withdrawn. For higher-income retirees, those withdrawals can be taxed at the highest marginal tax rates, creating a significant annual tax bill and potentially triggering an OAS clawback.

Without proper planning, substantial registered assets can also create another challenge at death. Unless transferred to an eligible surviving spouse, the remaining RRIF balance is generally treated as taxable income, potentially resulting in a significant tax liability for an estate. In many cases, families spend decades building their retirement savings only to see a considerable portion ultimately paid in tax.

John and Dianne wondered whether there was a better way.

Giving instead of paying more tax

During a conversation with the Canada Gives Client Services team, they learned about a charitable giving strategy that many Canadians overlook. If retirees don’t need their mandatory RRIF withdrawals to fund their lifestyle, those withdrawals can instead be donated to charity (or a qualified donee). While the withdrawals remain taxable income, the charitable donation receipt can help offset the resulting tax payable.

Rather than seeing more of their retirement savings flow to the Canada Revenue Agency, John and Dianne realized they could direct those dollars toward the causes they cared about most.

Once they spoke with their financial advisor, it was an easy decision.

They contributed their RRIF withdrawals to their Donor Advised Fund (or as we call it at Canada Gives, a Foundation account), receiving valuable charitable tax credits while creating an ongoing pool of charitable capital that could be distributed thoughtfully over time.

Their financial advisor added more value to this strategy by mentioning that they may be able to reduce or eliminate withholding tax on RRIF withdrawals when making a charitable donation, by applying to the Canada Revenue Agency using Form T1213.

Looking beyond annual withdrawals

As John and Dianne continued working with their financial advisors, they also explored how their registered assets could become part of their broader estate planning strategy. One option was to name their Canada Gives Foundation account as the beneficiary of their RRIF, upon the death of the second spouse.

By doing so, any remaining registered assets at death could flow directly into their Foundation account rather than through their estate. This approach can simplify administration, avoid probate on those assets where applicable, reduce the likelihood of estate disputes and generate charitable donation receipts that help offset taxes arising on the final tax return.

They also learned about another planning strategy. Individuals who wish to maximize their charitable giving during their lifetime may choose to donate registered assets while using life insurance as an estate planning tool to replace wealth for their heirs. Like every charitable planning strategy, this approach should be evaluated alongside qualified tax, legal and financial advisors to ensure it aligns with a family’s broader financial goals.

A family legacy of giving

Perhaps the greatest benefit of establishing their Canada Gives Foundation account has been the opportunity to make philanthropy a true family tradition.

Each year, John and Dianne invite their adult children to participate in conversations about which charities should receive grants from the Foundation account. Together, they discuss community needs, evaluate organizations and decide how they can create the greatest impact.

The conversations have become one of the highlights of their year.

Their grandchildren are also beginning to see firsthand that charitable giving is not simply about writing a cheque. It’s about understanding community needs, sharing success with others and making thoughtful decisions that improve lives.

For John and Dianne, those lessons may ultimately become their most meaningful legacy.

Making your retirement savings work for your favourite causes

Every family’s financial circumstances are different, and charitable planning should always be tailored to individual goals and undertaken with professional advice. However, for Canadians who don’t depend on their RRIF withdrawals for day-to-day living expenses, donating registered retirement assets can represent an often-overlooked opportunity to reduce taxes while making a meaningful difference.

At Canada Gives, we’re dedicated to helping Foundation families develop thoughtful charitable giving strategies that reflect both their financial circumstances and their personal values. Whether supporting charities during their lifetime, involving future generations in philanthropy or creating an enduring charitable legacy, our goal is to help donors maximize the impact of every gift.

For John and Dianne, a strategic approach to their RRIF transformed what could have become an ongoing tax burden into something far more meaningful. Instead of seeing more of their retirement savings flow to the Canada Revenue Agency, they’re directing those dollars toward the causes that matter most to them, bringing their children into their philanthropic journey and creating a lasting family legacy of generosity that will continue for generations to come.

The Canada Gives Team

To explore how a DAF might help you build a legacy that reflects your charitable values, consider opening a Foundation account with Canada Gives. Our team is here to help guide your charitable giving with flexibility and foresight. To learn more, contact a member of our team.