Agree 1000%. That's exactly what I've done, retired at 65, drew down $250,000 from RRSP 'til 70 (net decrease over that time in RRSP value was only about $100,000 due to equity asset appreciation), now collecting max CPP at 70. I also have a defined pension. My (nice) problem now is keeping tax to minimum, not even thinking about OAS but good to know it's there if I hang around long enough to need it. This is a plan I've been working on since I was 30 years old, and it has played out well for me. I tell all young people: start early, try to put something away every month...you won't regret it.
I'm 32 now already invested 10k in rrsp. Planning to put at least 150k by the time I turn 59 yrs old. Right after I turn 60 will start melting down rrsp 30k every year for 5 yrs and then will start receiving CPP and OAS with minimum tax burden.!
One consideration not mentioned is the fact that most people at age 70 lack the physical well being to enjoy life let alone at 87. Consider more income while you are fit enough to enjoy it as you get older you will not require as much. Having said that, put some time into staying/getting healthy and fit cause you can't buy it.
I am 70 and am still running my adventure wilderness company. I also have friends in their 70s who are healthy and working. So not sure I agree with saying most people lack physical well being. Guess it depends who you hang out with!
There is no guarantee how long any of us will live, let us not forget this. Those holding back benefits such as CPP and OAS may never live to receive them.
I think you are missing the point: makes total sense to take more income in your younger years. However, for anyone with significant savings the issue is how to finance the higher spending … do you take CPP early and keep your savings or do you reduce your savings and delay CPP.
I have subscribed to many channels, yours is the only one that I have clicked the bell for. Fortunately, I am relatively numbers minded so I have done all of our saving, planning and investing myself. I am already retired at 55 and my husband will retire at the end of this year at 60. It is very good to hear my strategies reinforced by your knowledge, I appreciate your efforts in making these videos and sharing your knowledge with us 'common folks'.
@@ParallelWealth I actually said to my husband, let's cash in RRSP's early, minimize tax as much as possible and delay CPP and collect a higher amount of guaranteed income for life. One thing I didn't know was that there is a benefit to delaying OAS too.
This was super helpful; I will likely start CPP at 65. My financial planner has never talked about the RRSP meltdown as a strategy and I do not need to leave money to my estate so getting as much from the government as I am entitled, and not leaving a lot of my own savings after death is important to me. I'm not really sure what I'm paying him for. Every time I ask for his advice on doing X or doing Y, he ALWAYS replies with "both are good options". Yes, but I'm paying you for advice, so please give me your thoughts! It's been frustrating to say the least as I'm not an expert in retirement planning strategies. I think I might get in touch with your office.
One also have to take into account of early money withdrawal from RRSP to replace the delayed claim of CPP. The money left in the RRSP account can then be invested in high dividend stock and being built up month after month to quite a lump money in the RRSP account. One also have flexibility to withdraw the money before/ after retirement whenever desired to suit your need. Taxation is not the only consideration.
Big dental or other medical estimate after retirement? Pay it from your RRSP: you dodged tax putting money in and you dodge the taxman again when you take it out if you claim that as a medical expense. The taxman will withhold a percentage of the RRSP amount withdrawn, but he can't keep it if you have a matching medical item on your T1. You can also elect to include medical items from any 12 consecutive months (eg. previous July 1 to Jun 30 of current tax year) to show just enough receipts in the current year to bring income tax to zero, saving the rest of this year's receipts to push next year's taxes down as well.
Hi, good coverage. Personally, my CPP and OAS are part of a diversified portfolio. There is an RRSP(diversified across sector, markets, currencies, types of risk,) TFSA(growth and blue chips,) investment account (GIC, bonds, blue chips, different sectors, gold, and cash. So delaying OAS and CPP, which offers guaranteed revenue stream that is indexed to inflation, is part of that diversification. I'm 65, and fortunately i can delay the OAS CPP.
Very clear explanation. Thank you. I wish I would have seen this video over three years ago when I was turning 65. You would have saved me needless clawbacks and increased my monthly OAS payments at 70.
I was just looking at how delaying receipt of retirement benefits can work for me and my wife. It was the perfect time to come across this video. Thanks!
One way to look at delaying CPP is that you have a guaranteed increase of value of return of 8.4% over the time you delay. Guaranteed. You will never get that return anywhere else. Therefore, if you can take advantage of it, do so.
Umm this completely discounts the fact you are missing out on payments 65-70... 1253 per month for 5 years take out 25% for tax is 939 leaves you with 67k value by age 70. If you flip that around and draw from that as if to mimic the increased CPP, surprise surprise it lasts until 82, the average life expectancy. CPP is pretty efficient, best is to take it when you need it, or if your family has history of longevity delay receipt, if you have health concerns take it early.
@@ATGAT I agree. I did not account for taxes, but the important thing I was pointing out is that, if you do not require it to live or have a short life expectancy, the increase in return, without any market risk, is worth the wait. I know that I did not say that directly, but given the conversation I thought the comment stood on it's own. The way I look at it is that when I am in early retirement, I can spend my relatively volatile income, but when I am older it is nice to never have to worry about where my income might come from. I have known too many people in their later years who are constantly worried about where the money is going to come from. Thanks
@@James-ye7rp If you have a short life expectancy, then why would you delay taking CPP? For someone with health problems, maybe it's better to take it early because you don't know how long you'll live. For someone healthy and has a long life expectancy, then it makes sense to wait if you don't need the money right away.
Thanks for keeping it simple Adam. We have saved and invested mainly in RRSP because of high marginal tax rate. In general, does it make sense to withdraw the maximum amount from RRSP early and keep taxable income under the first tax bracket, currently about $48,000 per person? We want to delay getting CPP money as much as possible to maximize RRSP withdrawal before 70 and to put excess money (after tax and expenses) into TFSA. This will also reduce RRIF withdrawal amount after 70. We mainly want to roll the RRSP money into TFSA to transfer to our children tax free when we die.
Isn't there's a much higher risk of sequence of returns when drawing down the RRSP faster at a younger age with such a small portfolio. Lets say she has several very low or negative return years in her early 60's? I'd like to see a scenario outcome for that. For < 100k more income over 28 years I don't think it's worth the risk. Also, older people tend to spend less when they're >75-80
I’m doing the complete 180 on this strategy,..started collecting CPP at 60,.. investing 100% in a RRSP umbrella. At 71 everything will be turned into RRIF…and will draw down as need be. Paying taxes can’t be avoided ,..
@@ParallelWealth I don’t really have a choice when I’m still building wealth,…I can’t draw down RRSP’s when my income is 100K plus. My retirement income will be 75K minimum
I think this is my #1 video as far as helping people save in retirement. It's a tried and tested process that works 99% of the time. Thanks for watching.
Thank you! All your videos are right on point. This one is coming at the right moment for me. I'm 54 and learning more about this since would like to pension at 60.
I like this idea, however as a kidney transplant recipient with potential future health problems, I’m not assuming living to 90+. As morbid as that sounds. I’m using an excel spreadsheet to try out different scenarios like you have here. In my case, I think delaying CPP to 70 is a bit risky so I’m considering somewhere between 60-65. In my wife’s case, however, it might be worth delaying until 70, so I’d say the analysis gets more complicated with a couple.
I struggle with worrying about estate planning. I die with $500,000 is RSP? So what? My beneficiaries will get over $300,000. Firstworldproblem! P.s. retiring at 58, wife at 55. CPP at 65 each, planning on 62% replacement, 32 years life, 4.5% return, 2.2% inflation. We own our home outright, no debt, slight DB pensions.
As a single Canadian, I totally agree with melting down or draining registered accounts in early retirement. Delaying CPP is great if one can do it, but, has a few negatives too. If you are single and happen to pass away, the potential money is not in your estate so is lost and can't be passed on to family. Also, if CPP is not required, one can take it and re-invest it in Canadian dividend corps that are eligible for the div tax credit which reduces your average tax rate as long as you don't make too too much and are disciplined ie, don't spend it.
Your health and expected longevity are key..What you do at 60 you may not do at 70 and likely not at 80-if you live that long. So don't wait too long if your health prospects are in question.
Great video. It would also be interesting to include what the estate paid in taxes after she died. Even more overall savings since there was less RRSP money in her account by doing an RRSP meltdown.
This^ . I would love to see a video on planning how to reduce the amount of tax your estate has to pay. Should you max out your income (within a certain tax bracket) once you hit 80 to draw down your investments, i.e. convert the investments back to cash?
As long as I have enough to live on and enjoy some living along the way, I'm fine once I'm gone, I won't be worrying about anything. I am now retired, house has no mortgage, have no debts. I live very frugally by choice. My family can have Whatever is left with my blessings. Plus I Will be donating to a couple worthy causes. I doubt that I will be around in my 80s or 90s. (health wise). And that's ok with me. Love your channel!
Great video Adam. Succinctly delivered. I get why you left the tax reduction part of meltdown strategy out as it can get quite complex for one video and compliance may not like it. This strategy is also worth thinking of for couples who have an individual wit reduced life expectancy. Using the TFSA after the meltdown is also worth noting potentially. Great content as always. Can’t wait for the next one.
Was 18 years into an rrsp. Threw it all out the window before the endemic started, and took the tax kick. By just saving and zero investing I'm a third away from what I had.
People don't understand that the more tax you pay the more money comes in your pockets. The bad feeling of paying taxes will never go way and one should always look at optimizing how much tax to pay, but also one should not be afraid to pay more tax if that means you put more money in your pocket.
It would be nice if you can further expand this with a video on someone having a corporate account and the pros and cons of early withdraw from a corporate account or a RRSP. Thanks for your informative videos.
Thanks for your videos! I’m 62 1. At what age can a Rrsp be rolled over to a RRIF ? 2. To minimize on taxes would it be beneficial to withdraw rrsp early, also to collect a higher GIS amount? 3. Would it help taking out small amounts of $1000 a month to reduce taxes.
Not accounting for taxes, in a low interest rate environment, it's better to defer as late as possible (unless you think you will die early). The assumed interest rate return within the CPP is much higher than the current rates.
Instead of drawing down on the RRSP balance why not consider investing in passive dividend income at the start? With the right mix of investments that 400K could be generating between $3000-$3500 a month in dividends. Supplement that with her CPP and OAS and it's not a bad monthly income provided she has no debt.
Many people have a defined contribution plan- I do. Many have other locked in plans from employers or government. I contributed 5% of my income, the company matched with 5%, so many people have tax deferred retirement plans happening, which is the basis of this post. Sadly, some of my coworkers do not embrace a 100% top up of their own funds.
I'm a Canadian expat and I find your videos extremely informative. Delaying CPP is absolutely the way to go for most people, just the same way we in the US should delay Social Security. It's the same argument of melting our 401K to maximize SS at 70 (and avoid minimum distribution). On top of that, we have a nice add on Bonus in the US: Spousal Benefits. Although my wife never worked in the US, she will be entitled to up to 50% of my benefits at her Full Retirement Age (67). Again, delaying my Social Security will also increase her share when she files. Win-win.
Love candles, we have lots - but will work on more. Appreciate you tuning in. And remember, most concepts we talk about benefit you regardless of amount of assets.
Is this an oversimplification? In these scenarios it appears as though you did not factor in the CPP penalty for waiting to claim. That penalty is significant enough to have a great impact on the outcomes of scenarios 2 and 3 Anyone who retires at 60 but claims CPP later is subject to a totally different averaging system when it comes to calculating your CPP. (For example CPP is calculated by taking an average of all your income months over your working lifetime (Scenario A: 18-60) (504months) however first reduces 17% of your lowest income months.Hence you could drop roughly 85 months (17%) By doing this you can effectively increase your average by a fair amount. Alternatively If you retire at 60 but wait to collect CPP at 65 the same rules apply however your working years are now (18-65) (564 months) This is a key difference, as the last 5 years of collecting zero dollars is averaged out. You can still reduce by 17% (95 months) however the last 5 years (60 months) is being used up effectively leaving you only 35 months to reduce instead of 85 months.
Hi Adam, Another great learning video your Company put out for us.All my working life put me in higher taxes bracket I have no problems paying my shared somehow to run Country the Government need to get taxes from us working people's once we retired hopefully the Government will share the money we put in in retirement.Your advice to us is really logical approach into what can we saved on taxes and also what we can get from the Government.I myself still working approaching 63yrs old next year but I don't plan to retire soon.But you advice to draw the RRSP 65 yrs excellent choice and delay your CCP at 70 yrs old for tax purposes both of them I don't need it when am 65yrs,am lucky enough I learn in early age to save for rain day at the end you have fruit of your labour .But the RRSP I have to start withdrawing by 65yrs to lower my taxes later on.Thank You,
I want to retire at 59,take out my RRSP, take out my work pension at 60, CPP and OAS at 65. I still ned$ to take to my financial adviser for his opinion. I want to spend my entire investments. I won’t need much money after 65
nice video adam, do you have any videos were you explain the TFSA strategy were you pull money out of it to live and pull out money from RRSP too but less? I read a book the "liberte 45" in french. it explains something like this: "Pull money out of your RRSP, just a small quantity, let's say 10K a year. Pull the rest from your TFSA, let's say 30K which is a total of 40K a year to live. TFSA is not taxable so you won't pay any taxes on those 30K but you will for the 10K. Since 10K is barely something , government will make sure to give you a high tax return because of your low income" something like this.
my strategy for the rrsp is to buy a house at age 40 use the first time home buyers plan then when the money is due at 55 you can put the money back for a short time then convert said 25 thousand into a rif. i am making sure that no more than 25 thousand will be in my rrsp
I don't think that will work. You have to repay the home buyers amount annually for the 15 years after you buy the house, it's not a lump sum after 15 years. If you don't pay into it each year, you're taxed on 1/15 of the amount you took out.
This was very good. I'm younger than this client, but based upon the scenario presented, I have more than enough in my RRSP to retire. I still have a mortgage to pay though. Once that is done I'll be in touch to get you guys to help me with my retirement plan strategy.
My confusion here is - you changed the amount of income in each scenario, in the 1st scenario you could have increased the RRSP withdrawal to match scenario 3....I don't have your tool handy but I am no sure that would work out worse for her....she may have less $ when she passes away but as you say the objective is Income not Estate.
Consider yourself lucky if you're 60 and didn't apply for early retirement benefits, I know " many, many " people applied because of financial , health , family situation, lastly this is your money take it, use it when you need it.
I have a few questions about your CPP numbers. 1. CPP at age 60 starts off with $7841 but then jumps to $8725 at age 61. Why the big jump the first year? Other years it goes up by about 2% per year for inflation. 2. Same for CPP starting at age 65, first year is $14214, second year (age 66) jumps to $15817. 3. And for starting at age 70, first year you have it at $23653, but then jumps to $26319 at age 71... almost a $3000 jump the first year. 4. Also, there is a 36% reduction in CPP at age 60 versus 65. So, doesn't it mean that if it's $14214 at age 65, then it should be $9095 at age 60, not $7841? 5. Same for age 70. Age 70 has a 42% jump in CPP. If it's 14214 at age 65, shouldn't it be $20183 at age 70? You have it at $23653.
Numbers might look odd due to Jan 1 birthrate which triggers a Feb 1 first payment. This will create all the discrepancies you mention. Apples to apples for 60, 65 or 70 for the comparison tho - so doesn't affect the scenario.
@@ParallelWealth Thanks, that explains my questions 1-3. But what about 4 and 5? That is, if CPP is $15500 at age 65, shouldn't it be $9923 at age 60 (36% reduction) and $22000 at age 70 (42% increase)? And actually, the maximum CPP is now $1203 per month and you said she gets 90% of that. which works out to $12992 at age 65, 36% less makes it $8315 at age 60, close the number you have. But then, how do you get the CPP at approximately $15500 when starting at age 65? Ahh, I think it's because the CPP maximum goes up by inflation of about 2% each year, which explains it - except I still think your age 70 CPP number is too high, because she's not working starting at age 60. But I think then you assume that she doesn't have more than 3 years of zero income from age 18 to 60. And listening to the video again, yes, you said she has worked her whole life. So I think that is where your scenario become unrealistic. People don't start out at age 18 with a job that is making 90% of the maximum CPP that year. And many people, like myself, spent at least 4 years in university/college after age 18. Myself, I didn't finish university and get my first full time job till age 27, so I already have approximately 9 years of zero or low income after age 18. So that would make your scenario more realistic - take into account how stop working at age 60 would add in 5 zero income years and reduce the CPP amount - so she wouldn't be receiving 90% of the maximum at age 65. Plus even then, shouldn't the age 70 amount be the age 65 amount plus 42%? That is, $15500 * 1.42 = $22010. This amount isn't adjusted by 2% increase for inflation each year, is it? But your age 70 amount is about $25800.
@@ParallelWealth Thanks. Myself, I'm turning 60 next year and already submitted my application to start CPP at age 60. I already have the maximum number of zero or low income years, so I figured having 5 more zero income years after age 60 might decrease what I will get if I waited till age 65 - but I didn't take into consideration if inflation would increase my payout at age 65. I know once I start receiving CPP, inflation will increase my amount each year. And the CPP calculation is just too complicated - I wish the government would be more transparent and make it easier to know your exact payout if you stop working now and take CPP at some point in the future... the estimate they give is assuming you continue working till you start CPP. You can only get the real number after you apply. Is there an excel spreadsheet out there where you can enter all your CPP history and get the exact payout?
@@RonaldH I’m in the same situation. I have a few below maximum years and i won’t be working until 60. You’re right about the CPP estimates, not much use for early retirement scenarios. I plan to start CPP at 60 or maybe a few years after once I sort out how many “zero” years I have.
OK Understand effective tax rate now. But why in the chart does it say for the RRSP withdrawal "Rate" 5%. The withdrawals are greater than 5% of the RRSP balance?
It seems that average tax rate of 7% is not considering the fact that cpp and oas will also be taxed. My understanding was that the entire amount showed under Nominal tax dollars is taxable and in that case, the tax rate is higher than 7%.
I’m confused by the terminology for RRSPs vs RRIF. When you say she is withdrawing from her RRSP, I presume you mean from her RRIF (?). Related to this is there any advantage in delaying switching from an RRSP to a RRIF if you are withdrawing anyway? My wife is a few years younger than me and is 61. She is self employed but with a very low income. Right now we are withdrawing dividends from her RRSP and haven’t converted it yet to a RRIF. Does it matter?
While I don't disagree with the benefits of delaying CPP, your analysis is somewhat flawed. Scenario #3 has roughly half the Net Estate value as #1 -- of course the annual income in that case will be higher. I'd like to see what the differences between the scenarios are with the same Net Estate value...
8:10 why effective tax rate is higher - 13.06% when CPP is taken at 65? Yes the income is coming from RRSP/RRIF but CPP is also taxable. Is there a video that explains the tax planning nuances?
Great video! But, I do have question: Assuming the person studied until 24, what is the impact for not working from 60-65? I am asking because only the 7 lowest years can be dismissed from 47 years of work considered (18-65).
Great content, as always, Adam. What are your thoughts on, either combining with this strategy or stand alone, borrowing to invest in non-registered account containing dividend portfolio in order to offset the taxes on RRSP withdrawal by the interest expense on the borrowed fund. Recognizing borrowing to invest increases risk. Have you had the opportunity to run the numbers for any client? What did the data show - is there a reward to be considered to evaluate if the added risk is worth it? Or do you think is it is just a bad idea and if so, can you please explain. Might this be a topic for a future episode?
Great video. My only struggle is do I maximize my dollar I get from government or do I maximize the utility of the dollar I receive? Hard to estimate now, with every passing year and recent diagnosis of Gout, I am would appreciate dollars earlier than later in life.
This scenario doesn't work for higher retirement income. What if client have $50,000 annual pension. Delaying cpp & OAS will have OAS clawback. Plus if anyone is couple they can share retirement income upto 50% with spouse. Most ppl do have pension plan from work
Most DO NOT have a DB pension plan at work (just Google it). We have run this scenario for higher income earners and it works most of the time. Can even create strategy most of the time to avoid OAS clawback (not always).
I find the concept fascinating. My culture cares about the estate (aka: get the stable government money first and spend the rrsp later) and your concept is the opposite (and more focus on your money). I have many years before retirement, but I just have no clue how to make the decision.
Ok, nuub guy here, single Widower, 61 yrs. want to retire but am still working because i have to. Hate that. Would like to hold off on CPP and Oas until 70. i get the idea of drawing down RRsp before taking OAS or CPP. My locked in RRsp is only in the $30,000 range and not in the $400 or 500 thousand range as a lot of your scenarios are. I was not a great saver in the past. I would blow that in a year or two if i draw down, My widowed pension is less than $250/ mo. My TFsa is an abysmal and below $10000 which i am currently drawing down on now. I need at least $4000/mo to survive comfortably . I dont get it.
I’m not sure how you would optimize your RRIF withdrawals. If you minimize your withdrawals to avoid a higher tax bracket because you already have a partial pension while also taking CPP and OAS how do you know whether you will get a bigger tax hit down the road when you are forced to take out larger amounts and risk OAS clawback? It seems you need some kind of optimization software to figure out the right combination of withdrawals from your different investment accounts .
Hi, i came accross this video and very helpful. Thanks. I am closed to 65 retirement bracket. If I decided to retire in 65, is it ok or make sense to withdraw all the RRSP invested? Point is, there will be no need to minimize the tax bracket as no employment income is expected.
Great explanation and example. We are just starting to do the same thing, wife retired (62), I'm still working (63) and will continue for a while yet, I enjoy it. Our intent will be to withdraw ~46k each when both retired. We have healthy RRSP & TFSA balances, house paid off. 6k of the 46k we withdraw will slide over to our TFSAs. My only concern with leaving her pension alone until 70, is that I'm not 100% clear if she will miss out on max available pension after not contributing for 8 years. Yes, it increases by 7%/yr after 65, but her eligible max years of contribution may diminish. Wondering if there's a simple analysis or calculator for this ?
If I have a million dollars and I have ten years to live, how much should I spend per year to wind down all my savings in order to leave nothing to my greedy relatives ?
If you get 6-7% and if the money is invested, then spend 60k plus 70k, total of 130k per year should do it. Plus or minus, I just made a quick calculation.
I have been enjoying your videos. Have you considered making a video about how to sell stocks within a self directed RIF? Should I sell stocks monthly or quarterly, what happens if I fail to sell enough assets in my RIF to cover that month?
Check with your bank about the withholding tax rules - basically you can only withdraw $4,999 every 3 months at 10% tax - there a few other rules you should learn about
@@beautyofthailand7393 Trying to minimize your withholding does not minimize the tax you ultimately owe. How much tax you actually owe in April will be determined by your TOTAL taxable income, regardless of how broke up the withdrawals. Think of witholding as rough prepayment. If you take out too little, you will just owe more come April.
Thank you Adam for your videos about RRSP, RPP which are really informative. "How about the RRSP, RPP (locked-in and non locked-in) and CPP withdrawals for the temporary work permit holders considering their work permit and SIN expiry. Is it a good idea to withdraw them before the work permit / SIN expires if they have no plans to extend their work permit?"
Hey Adam, any chance you could include a video with a significant non reg account as part of retirement strategy? My company I work for is a Fortune 500 and when I retire should have around $300k in a non reg plus $800k RRSP with $600k in TFSA, I’m assuming I melt this down the non reg first before RRSP? I’m single if that helps. Love the channel!
Great video. Sadly my advisor NEVER spoke of RSP melt down. My situation is one I don’t think you have reviewed. I have a good DB pension. However, my husband didn’t so he had a RSP. When he died, I inherited his rather substantial RSP. How do I figure out how much to draw out from the RSP? Thank you.
Krys, sorry to hear. The number to draw down will vary depending on other income etc - but try to melt it down by mid-late 80s if you can without driving up your tax bill too high.
Maybe I missed it but think I found an error in your reasoning. Wouldn’t your rrsp be larger if you allowed it to grow an extra 5 years a posed to starting withdraws 5 years earlier? I don’t think you can use the same rrsp starting amount.
Wondering what you would recommend for me as I have 1M in RRSPs and I am currently 53, married, thinking of working two more years and then retiring. Don’t have a pension, house paid off and thinking of moving to Europe.
I am 60 & I have RRSP'S but I am going to continue to work until at least age 65. Should I be pulling out some of my RRSP'S every year up until 65 and put them in my TFSA?
Scenario 3 adds ~$27k of after tax cash vs scenario 2 but the net estate is ~$38k lower. It seems the extra cash is self funded and she’s leaving herself less equipped for emergency or special RIF withdrawals. I grapple with the “defer to 70” philosophy, Well laid out video though and I like the conviction.
Question: I want you buy $30,000 in Spousal RRSP. Can I claim $20,000 and she can claim the other $10,000 at year end? Or does she need to buy it on her own RRSP for year end tax?
Excellent video. Wonder if the client would gain by investing her meltdown RRSP $$'s into TFSA - to be withdrawn as needed later on. Do you know of any free divestment planning worksheets available where one can run their own numbers ?
Rev Canada has a great worksheet, on line, not excel. BUT, it gives a great idea of how to build your own, that looks a lot like what is shown in this video- starting savings, subtract withdrawals, add gains, take that yr’s ending amount, as the starting value of the next yr. adjust w/ds up by a fraction, ergo inflation, maybe add a lump sum w/d every 10 yrs for a car, or repair, …. I have one that I built using this type of algorithm. It was very close, in results, to the Rev Canada one and will follow it into retirement.
How are u losing $2000 a year? You re not factoring in collecting the 5 years at a reduced rate. Also by liquidating rrsp you leave less to your inheritors. U collect at 60 you only start losing at like 73. I disagree.
Thanks for another good video. I enjoy watching and they are helping me understand my options better. In this video you show tax rates. Can you explain the difference between Marginal tax vs Effective tax. Thanks
Interesting video. I hadn't thought of it this way before. When you did your tax calculations, did you consider provincial taxes and the age amount non-refundable credit?
RRSP meltdown was something I was not aware of as I approach 65 in a handful of years from now. Looks like delaying CPP is definitely a plan..👍..and OAS as well as I melt down the RRSP which would be changed to a RRIF by the age of 65....and where one would take out of the RRIF the minimum amount so to not have the with holding tax applied. ADAM, what is interesting is that my RRSP is all stocks that produce dividends (cash) per month....so it looks like I would not be deminishing the principle and only be taking from the⭐️ cash from the dividends that are produced. ⭐️ If one holds stocks then things are set up with the strategy that the stocks in the investing vehicles are the "gift that keeps on giving" without touching the principle amount. I certainly appreciate how your video's are relevant and current and quite educative. I was hoping that someday a Canadian company would help educate us about financial planning measures...and voila! There you are 💯. 🇨🇦
@@ParallelWealth Yes Adam, that is what I thought as well. 🤔 The issue I see developing is that the dividends are presently 1000 per month....so that means 12,000 per year....and I seem to recall that the minimum to take out so that one doesn't get into a with holding tax situation may be a lot less than the 12000 per year. You had a chart on percentage showing age and percentage representing with holding tax based on age. I look forward to your Thursday Video on with holding tax. 👍
A very good and concise explanation, and it confirms my belief that drawing down my RRSP between 60 and 71 yrs old is a good strategy. But I have a question regarding RRSP withdrawal rules that no one, including google, can't seem to answer for me; how soon after contributing to an RRSP can you withdraw funds? i.e if I contribute $15000 to finish using up available room, do I need to wait a set time before making an RRSP withdrawal? Thanks
Nope, can take the next day. Contribute Dec 31 for last year of working income and take Jan 1... The only time you need to wait is for a Spousal RRSP - which is 3 years. Although convert to a RRIF and min amount is not attributed for taxes.
If you do an RRSP meltdown between retirement and drawing CPP and OAS, there are definitely tax savings. What about the loss of compounding over those years? Can you do that comparison? Thanks!
When you say RRSP meltdown, does that mean instead of converting to a RRIF, I just make withdrawals in my RRSP. What about the withholding tax? You mention an average tax rate of just under 8% how? In Ontario $33K income is just under 12%...I'm so confused
Love all your videos, Adam, and am learning lots! I am similar to the example you used, except I'm a single parent with adult children. I want to make sure my kids will inherit as much of my money as possible. I am semi retired and have a defined pension plan and RRSPs. Would I be better to take out more of my RRSP money and put it into a TFSA now (I have nothing contributed in TFSA at present) so that my children will hopefully end up with more, or just slowly meltdown my RRSP money? Thanks to your advice, I am delaying CPP until 70.
I would try to withdraw your RRSP by early 80s if possible. Each situation is so different, but melt it down as fast as possible and add to TFSA as long as the taxes make sense.
Your Ytube videos were eye opening to lack of a formal financial plan. Cannot afford nor need all services in the fee for service ($3K) already taken early CPP and OAS-GIS at 65. Are there any "ala carte" for fee services (remote to Toronto) focussing on meltdown of both a LIRA and/or RRSP?
Do your calculations consider the additional tax on the non-registered annual investment income that will occur as you do the RSP meltdown but don't spend the RSP income? For example, if your spouse has a great pension and you do the more agressive meltdown (delaying CPP to 65 or 70), but don't spend what you withdrew from the RSP. Then you are investing that money and earning investment income that could affect the tax rate. How can I apply that scenario to planning software to see if I am doing the right thing with the agressive meltdown?
Lynn, yes the taxes (income, dividends and CG) are all included in the annual taxes. Assumptions are made around portfolio construction and turnover - but those can be adjusted too.
Great examples, however they are kind of specific to those income/savings levels where tax rates are lower. Can you give us some advice on how to handle your RRSP savings when your tax rate is near the max and you have a more substantial balance in the RRSP (>2million $) from the start?
Thank you. QUESTIONS,: at what age can you start drawing on RRSP,? Can you be working full time and retire at 65 and still draw down RRSP at 60. Can you use RRSP to pay existing mortgage?
You might want to consider the amount of taxes you might pay if you continue to work and withdraw RRSP's. Your RRSP withdrawal will be added to your income for that year. For me, I'll start withdrawing RRSP's when I am completely retired. My plan is to give the government as little as possible.
@@Redneckboy991 People who do early withdrawals usually do so when they have little or no income. If you wait until you're completely retired you could end up paying more taxes when you factor in pension payments, CPP, and OAS.
@@brianxyz If I was to withdraw my RRSP's while working, it would easily put me into a higher tax bracket. Now if I was retired and withdrew RRSP's while collecting government pensions, my tax burden would be much smaller. The original poster asked if she could withdraw RRSP's while still working full time. Cashing RRSP's while working full time is not advisable. I guess it all depends how much she makes and how much her portfolio is worth. My plan is to retire at 60 (in 4 years) and live off RRSP's, then collect pensions at 65.
