First, though we try to provide as much information as we can, we are not able to provide any specific investment or financial advice.
In short – it depends. You can purchase an annuity with funds from any source – whether registered or non-registered funds. The difference is in the tax that you pay. You can purchase an annuity with the proceeds of your RRSP when you are ready to convert your savings to retirement income. Other options at this time are to set up a RRIF or take your RRSP proceeds as cash – or any combination of these.
Once you set up a RRIF, you must start making annual minimum withdrawals. If you transfer proceeds from your RRIF directly to an annuity issuer, you may be able to receive a deduction on the excess amount of your RRIF withdrawal, that is, the amount above the minimum for that year. Learn more from the Canada Revenue Agency, and speak to a registered financial advisor or tax professional to understand whether this would apply to you.