90-Age Formula

An equation used by Canadian retirees to calculate how much money to withdraw each year from their Registered Retirement Income Funds (RRIFs), a type of tax-advantaged individual retirement plan. Retirees are required to withdraw a minimum amount from the plan each year and can calculate the amount to be withdrawn using one of two formulas: the 90-age formula or the 90-percentage schedule.

The 90-age formula assumes that the retiree will live to be 90 years old. It calculates the annual withdrawal amount by dividing the book value of the RRIF at the beginning of the calendar year by (1- (90 - planholder or spouse's age)). The morbidity calculation allows the RRIF to act as a lifetime annuity. The money withdrawn from the RRIF is taxable at the retiree's marginal tax rate.