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The impact of LIRAs on your retirement savings and income


A locked-in retirement account (LIRA) is a type of retirement savings account that is restricted by pension legislation. LIRAs are often used to hold the proceeds from a defined benefit pension plan when an individual leaves their employment.


While LIRAs can be a useful way to save for retirement, there are some important considerations to keep in mind when it comes to their impact on your retirement savings and income.

  1. LIRAs are locked-in – The main difference between a LIRA and other types of retirement savings accounts is that the funds in a LIRA are locked-in, which means they cannot be withdrawn until a specific event occurs, such as reaching the age of 55 or retiring from your current job. This means that you may not have access to your money in a LIRA if you need it for an emergency or unexpected expense.

  2. LIRAs may have lower investment options – Another potential impact of LIRAs on your retirement savings is that they may have limited investment options. LIRAs are often restricted to investments that are considered low-risk, such as government bonds and money market funds. This means that you may not be able to take advantage of potentially higher-yielding investments, which could impact the growth of your savings.

  3. LIRAs may affect your retirement income – The funds in a LIRA are intended to provide income in retirement. However, the amount of income you receive from a LIRA may be limited by the rules of the plan and the amount of funds you have saved. This means that you may not have as much income in retirement as you would with other types of retirement savings accounts.

Overall, LIRAs can be a useful way to save for retirement, but it’s important to understand their impact on your savings and income.


Be sure to carefully consider these factors before deciding if a LIRA is right for you.


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