Thank you for making this video! I have been saying the same thing - but few believe me. If your income is higher, melting down your larger RRSP can easily push you into high 40's tax rate, and then you are better off just letting the RRSP continue to grow tax free. Yes, you will pay 50% at the end, but the compounding tax free inside the RRSP more than makes up for it. In fact, you can end up ahead, rather than melting down.
Personally, I think the right answer is to melt the RSP down, and that extra income above the minimum should definitely go into growth stocks that do not pay a dividend. This provides the option of allowing the gains to grow, in a way tax deferred, because capital gains don’t get triggered until they do. Should those, now unregistered, investments be needed for an outsized expense, then yes, there might be a little bit more tax to pay. I also agree with the overall portfolio approach of reducing the stock exposure of the RSP - if the retiree wants to maintain a certain stock/fixed income balance.
Yup. If invested entirely in investments that attract only capital gains, then RRSP meltdown results in higher after tax $. It's 50% marginal rate vs 25% marginal rate. Also, if you have a losing position in an RRSP, you still pay full tax. In a nonregistered account you can offsset.
Canada has different tax brackets depending on your income and it's not all taxed at the same percentage. Many Canadians don't even understand how the tax brackets work and they assume that all their income is taxed at the highest income, which is incorrect.
Yes the high income earners and business builders pay millions for the healthcare of others . Better to move which is what hundreds of thousands have done
Hmm similar situation to Ryan. I plan on melting down all my RRIF before 71 and make sure I have maxed out my Tax free accounts. Will be more $ for my kids and allow me to delay CPP and OAS till 70. That plus an indexed pension will cover all my needs and allow me to leave everything else to my estate.
He should retire now, start taking money out of the RRSP now, converting some to a TFSA and using the rest, don't wait to spend in the NOGO years cause it aint gonna happen !!!
It would be nice if you would stop making video for the millionaire...the one that needs help is the lower middle class...THAT don't understand about finance.
Marc is assuming that the funds have all been transferred to a RRIF by 71 so the exact same funds are held in the RRIF as were in the Rrsp. They are free to grow in the RRIF tax free.
Mandatory withdrawals from the RIF, eventually it will be zero anyways. The tax will still be pretty heafty, but that's because he has so much stacked away. He'll never be hungry.
Lots are, and then some. Including Many government bureaucrats that are making multiples of $100k salaries. That's why we have to keep finding ways to pay less tax, because they keep spending out of control.
I'd have to disagree. He was able to grow is RRSP tax free and take advantage of the tax incentives at the same time. He's also maxed out is TFSA, which is a good thing. He's in great shape
Thank you for making this video! I have been saying the same thing - but few believe me. If your income is higher, melting down your larger RRSP can easily push you into high 40's tax rate, and then you are better off just letting the RRSP continue to grow tax free. Yes, you will pay 50% at the end, but the compounding tax free inside the RRSP more than makes up for it. In fact, you can end up ahead, rather than melting down.
Personally, I think the right answer is to melt the RSP down, and that extra income above the minimum should definitely go into growth stocks that do not pay a dividend. This provides the option of allowing the gains to grow, in a way tax deferred, because capital gains don’t get triggered until they do. Should those, now unregistered, investments be needed for an outsized expense, then yes, there might be a little bit more tax to pay. I also agree with the overall portfolio approach of reducing the stock exposure of the RSP - if the retiree wants to maintain a certain stock/fixed income balance.
Yup. If invested entirely in investments that attract only capital gains, then RRSP meltdown results in higher after tax $. It's 50% marginal rate vs 25% marginal rate. Also, if you have a losing position in an RRSP, you still pay full tax. In a nonregistered account you can offsset.
Oof, those tax rates in Canada are brutal.
....wait, you haven't seen the tax rate for Quebec
Canada has different tax brackets depending on your income and it's not all taxed at the same percentage. Many Canadians don't even understand how the tax brackets work and they assume that all their income is taxed at the highest income, which is incorrect.
Yep, we cry on our way to the hospital, which we don’t pay for out of pocket.
Yes the high income earners and business builders pay millions for the healthcare of others . Better to move which is what hundreds of thousands have done
@glenscott5063 see ya!
Thanks very much for the video! I'm passing along this information to a family member that is in a similar situation.
Glad it was helpful!
Put any RRSP/RRIF meltdown funds into a TFSA, if contribution room exists. Hopefully, there is lots of room!
What if Ryan put the 35K in stocks (in the non-registered account)that generated eligible Canadian dividends? Wouldn't he pay less tax that way?
Hmm similar situation to Ryan. I plan on melting down all my RRIF before 71 and make sure I have maxed out my Tax free accounts. Will be more $ for my kids and allow me to delay CPP and OAS till 70. That plus an indexed pension will cover all my needs and allow me to leave everything else to my estate.
He should retire now, start taking money out of the RRSP now, converting some to a TFSA and using the rest, don't wait to spend in the NOGO years cause it aint gonna happen !!!
Solid advice ✅
Thanks Billy!
It would be nice if you would stop making video for the millionaire...the one that needs help is the lower middle class...THAT don't understand about finance.
Anyone with that kind of money should really be more philanthropic.
You can’t keep the funds in a RRSP past 71. I’m perplexed as to why you recommend that at all.
Marc is assuming that the funds have all been transferred to a RRIF by 71 so the exact same funds are held in the RRIF as were in the Rrsp. They are free to grow in the RRIF tax free.
@@misspethamhouse9072 sorry but a specialist such as him can’t ‘’assume’’ that those watching all understand the rules.
Mandatory withdrawals from the RIF, eventually it will be zero anyways. The tax will still be pretty heafty, but that's because he has so much stacked away. He'll never be hungry.
how can anyone be that rich?
Lots are, and then some.
Including Many government bureaucrats that are making multiples of $100k salaries.
That's why we have to keep finding ways to pay less tax, because they keep spending out of control.
Brian's mistake is having an RRSP at all while being in the high income bracket. His OAS will be clawed back and lose out on other senior benefits.
I'd have to disagree. He was able to grow is RRSP tax free and take advantage of the tax incentives at the same time. He's also maxed out is TFSA, which is a good thing. He's in great shape