Registered Retirement Savings Plans (RRSP) was created as a device to help us save for the ultimate day when we would retire from work.

RRSPs dates back to 1957 when only trust and insurance companies could offer them. This was mainly because of how the money was designed to be disbursed at retirement.

Planned to be turned into an income at some point nearing older age, an RRSP must generally be converted into one of its settlement options by the end of the year in which the owner or the annuitant turns 71.

For those who do not choose a rightful option, the investment is de-registered and the whole amount comes into income, which becomes fully taxable. After all, the appeal of an RRSP is the tax deductible contribution. During its life, all earnings are grown tax free until the day of reckoning.

There are different plans to choose from. One option is Life Annuity, which as the name suggests, paid someone for the duration of their life. However, this did not allow for much flexibility. The income amount was the same at the beginning of the withdrawals as at the end.

This challenge led to the development of the Registered Retirement Income Fund or RRIF. It's an option to allow people to control their investments beyond age 71 and to take a varying amount of income out.