Completely depends on the situation, health, longevity assumptions etc, but in this case the AI Strategies suggested age 70 for both CPP and OAS start age. This allowed more time for RRSP Meltdown.
One thing I don’t understand in the case of too large RRSP is why you would want to touch the TFSA to supplement the income, especially if the goal is to melt down RRSP account in the beginning? After all, TFSA is not subjected to tax so why not just keep it and used it only when RRSP ran out. I had thought TFSA is only subjected to estate tax (1.5%) if there is some after death?
In the $1M RRSP example they’re not drawing from the TFSA, they’re contributing to it every year, shifting RRSP/RRIF assets to the TFSA where they can continue to grow tax free.
Interesting video. The $130,000 RRSP is actually the average that most Canadians have saved. I wonder what the effect would have been if the $130 k RRSP had melted down slowly over 20 years..60 to 80 that's only $7000/ year taxed at 20%. Raw numbers may say it's best to hit 2 high income years and taxes, then re qualify for GIS, but what about LIFESTYLE and GoGo years. I get that the money can be moved into TFSA but I think it's relevant of the importance of living well in early retirement.
In that particular case tax is less of a concern and its the 50% clawback on GIS that is causing a problem. So those $7,000/year RRIF payments are causing $3,500/year in GIS reductions. Drawing it all out over 2-years doesn't have any impact on spending, if anything, they have more spending flexibility as its all in the TFSA by age 73. We went through this particular example in more detail in this past video, you might enjoy watching as we optimize their plan... ua-cam.com/video/SAm4OCi6DE4/v-deo.htmlfeature=shared&t=2156
Still working? Or want to retire asap? How much do they want to spend in retirement after-tax? What is the capital gain (or adjusted cost base) on the $3M non-reg account?
I wonder about a couple who has 1 million in RRSPs? That’s saying 500k each and they’re 50,but want to retire at say…58? Would you think they’re saving ‘too much’ since more will be added before the early retirement. 🤔 I’m asking for a friend…definitely not for myself😂
That could be a great future case study. It depends on how much is being added. But if they retire at 58 that does leave some room to draw down the RRSPs before CPP & OAS begin. Every situation is different.
It depends on your situation, proximity to retirement, age of retirement, individual or couple etc. Even a "small" RRSP can be too large and cause unnecessary GIS clawbacks. But anything over $750,000 to $1,000,000 is definitely approaching "too large".
In Devon’s case, when should he start collecting CPP given his large RRSP balance? At 60, 65, or 70? Thanks.
Completely depends on the situation, health, longevity assumptions etc, but in this case the AI Strategies suggested age 70 for both CPP and OAS start age. This allowed more time for RRSP Meltdown.
One thing I don’t understand in the case of too large RRSP is why you would want to touch the TFSA to supplement the income, especially if the goal is to melt down RRSP account in the beginning? After all, TFSA is not subjected to tax so why not just keep it and used it only when RRSP ran out. I had thought TFSA is only subjected to estate tax (1.5%) if there is some after death?
In the $1M RRSP example they’re not drawing from the TFSA, they’re contributing to it every year, shifting RRSP/RRIF assets to the TFSA where they can continue to grow tax free.
Interesting video. The $130,000 RRSP is actually the average that most Canadians have saved. I wonder what the effect would have been if the $130 k RRSP had melted down slowly over 20 years..60 to 80 that's only $7000/ year taxed at 20%. Raw numbers may say it's best to hit 2 high income years and taxes, then re qualify for GIS, but what about LIFESTYLE and GoGo years. I get that the money can be moved into TFSA but I think it's relevant of the importance of living well in early retirement.
In that particular case tax is less of a concern and its the 50% clawback on GIS that is causing a problem. So those $7,000/year RRIF payments are causing $3,500/year in GIS reductions. Drawing it all out over 2-years doesn't have any impact on spending, if anything, they have more spending flexibility as its all in the TFSA by age 73. We went through this particular example in more detail in this past video, you might enjoy watching as we optimize their plan... ua-cam.com/video/SAm4OCi6DE4/v-deo.htmlfeature=shared&t=2156
@@adviice_ca Thanks for the explanation. Great clarification. 3500 x 20 is very significant
my colleague if each of the couples has 800K RRSP, TFSA Maxed out, and has 3M non-registered and 700K GIC ladder, paid house? @ 50 what is the plan?
Still working? Or want to retire asap? How much do they want to spend in retirement after-tax? What is the capital gain (or adjusted cost base) on the $3M non-reg account?
@adviice_ca want retire sometime between 55-60.want to spend combined 10000 per month. 800k unrealized gain in non-reg.
I wonder about a couple who has 1 million in RRSPs? That’s saying 500k each and they’re 50,but want to retire at say…58? Would you think they’re saving ‘too much’ since more will be added before the early retirement. 🤔 I’m asking for a friend…definitely not for myself😂
That could be a great future case study. It depends on how much is being added. But if they retire at 58 that does leave some room to draw down the RRSPs before CPP & OAS begin. Every situation is different.
What is a too large RRSP?!?
It depends on your situation, proximity to retirement, age of retirement, individual or couple etc. Even a "small" RRSP can be too large and cause unnecessary GIS clawbacks. But anything over $750,000 to $1,000,000 is definitely approaching "too large".