Life Income Funds (LIFs) are an effective retirement income vehicle specially designed and regulated by the Canadian government. LIFs are used to provide people nearing or already within their retirement years with income generated from their savings and investments.

To purchase a LIF, people must reach early retirement age as stipulated by the pension legislation and they must begin receiving funds the year they turn 71. Contributions to a LIF can be chosen from a variety of investments, as long as these investments qualify under the Income Tax Act. Assets within a LIF also offer owner protection from creditors.

The growth of contributions to a LIF are also tax-deferred and the government has set specific withdrawal amounts for these funds according to the RRIFs established in the Income Tax Act.

In addition to these benefits, many institutions in Canada offer LIFs. This provides customers with an advantage to compare various LIF offerings from respective providers, offering unique features and services that could potentially increase incomes beyond those issued through the government. This is especially beneficial for those who, through their investments, are able to harness the potential of compound-interest returns while they remain sheltered from any tax liabilities.

Overall, LIFs offer significant advantages to people as they approach retirement age. Choosing the right LIF is important, however, and individuals should be mindful of their individual needs, goals, and financial ability when making their decision.