I don't know why anyone would want to recommend bringing down the TFSA to the zero first, before the RRSP? General logic is too use up the RRSP first before you touch your TFSA and start taking your CPP, I'm also not a fan of not taking your CPP and OAS after 65 yrs old - reason is who knows when your going to die and its a fact that you will spend less as you get older.
Most plans we see from the banks have the TFSA drawn first. No idea why. As for CPP timing - personal preference. Based on life expectancy delaying will give you more.
It would nice to see some videos with content that’s not based on everyone retiring at 65. Some people retire decades earlier so RRIF’s, CPP, clawbacks etc etc don’t apply for decades.
Grateful to you channel and the solid information provided! I'm in my early 40s and my TFSA has been maxed since inception in a self-directed Brokerage. RRSP i've only contributed enough to lower my Tax Bracket one level. My Goal is a minimum $1M TFSA by retirement, and live off the tax free dividends (in addition to other investment vehicles and pensions) and laugh all the way to the bank. Everyone should try to have their own strategy that works best for you so you never rely 100% on CPP/OAS which is pitiful if you want a good comfortable retirement.
Some of us don't have a lot of room left in our TFSA accounts, I have about 35,000. I do plan on maximizing it. But as of now, my investments are still not making much in returns, my TFSA is only at 1.4%. So I've left my cash in a high interest savings account. Again, the issue is that the bank account generates interest ..and it's taxable. I work part-time now, have a DB pension , an RRSP meltdown at 60 will just make more income taxable .it will also force me to stop working. My dilemma is taxes. At 65 my bridge drops off..CPP will be higher than the bridge, OAS will be clawed back. I'm not sure how many videos have Mr & Mrs UA-cam having $400,000 in RRSPs, but most people I know don't have that much saved up. I don't. Everyone has a different scenario , but I would like an analysis of people who have one or 2 DB pensions.
Many small biz owners or self employed don’t have RRSPs. We ran numbers with CA for yrs who said didn’t make sense for us either pre or sale/retirement.
Consider: after the TFSA the only remaining tax free asset is your primary residence. Should I activate our RRIF at 65 and use the income to move to a nicer home? The intention is to create a larger tax free estate for my adult children. The caveat is I would need roughly a $200K mortgage.
Thanks for your presentation. A prospective you seem to avoid is couples retiring at different times. I have retired and drawing from my RRSP. The drawings are going straight into my TFSA. Once my TFSA is maximized, should I top up my wife's, she is 5 - 7 years from retirement.
You bet! Have a few video scenarios like this. Try and spread out the base case scenarios as much as possible. Will have a spread in retirement age video soon.
It seems that most of the taxes saved benefits the estate. looking a the taxes actually payed buy the individuals while they were alive, were $446,311 in the non-drawdown scenario and $492,196 in the drawdown scenario. In fact the figures shown here has the net worth at age 86 higher for the non-drawdown. I'm in my 2nd year of drawing down my RRSP/RRIF because theoretically it makes sense but the numbers in this video has me wondering if it mainly benefits the for estate.
Adam, I enjoy your videos. Very informative. Just curious in this example when you state the extra money gets funded back into the TFSA and I see some of the contribution figures raging from 25-36k per year. 2024 limit is 7k or 14k for the couple. Are you expecting a large increase in contributions down the line to 36k? Awaiting your reply. Thanks.
Hello Adam have set up getting CCP And OAP as well as A DB pension which half is a LIF pension ,I find this is giving me enuf month income to pay my bill right now at 67 but get hit yearly with the tax from them all ,right now I am taking 60% of my LIF to pay taxes ! I also have quite a bit in RRSP and TFSA and cash (GIC and GIA ) which I have not touch and some generate income which adds to tax bill ! I think but not sure that I will never be able to use RRSP Or saving unless I live to my 90's And advice on how best to deal with this ? I do not have and deductions and am widowed . Thanks
Hi There, I'm a fervent follower of your website and the detailed information you provide. I also recommend your planning advice to my friends and colleagues. I pride myself on being up-to-date and following investment advice quite diligently. Unfortunately, I made a rookie blunder and overcontributed to my RRSP - I know! I did some research and I'm definitely on the hook. What is the best course of action to rectify this issue? I'm not capable of filling out that complex T1#$#$ form. Do I call Raymond James and make a withdrawal equal to the amount I over-contributed, do I simply submit my taxes, and see what the NOA says, or do I call the CRA and get them to do the calculations after submitting my taxes. I really appreciate your advice - I feel a little silly on this one.
I have a RIF and a LIF. because my pension plan was federally regulated I could put 50% in each. In the melt down scenario I am limited in my LIF yearly to small percentage while my RIF is unrestricted . Consequently I will run out of RIF before I run out of LIF. Could you post a video on how to deal with this effectively. I am 63 my wife is 60 and we have our tfsa's maxed out and a lever account. Thank you really appreciate your videos.
I understand you do not need to convert your LIRA to a LIF until age 71 when you can convert 50% of it to a RRSP/RRIF but maybe you have already done this.
Any recommendations for simple free or moderate cost calculators for TFSA/RRSP & tax withdrawal strategies for the math challenged among us?@@ParallelWealth
What concerns me here is what if one of them dies before they start collecting CPP and now they have pretty much drained their rrsp’s. It seems to me that because the one survivor will receive very little more monthly funds from the government over and above their own CPP, they may struggle financially going forward.
Very good point. I wonder the same thing. My partner is 7 years younger than me. What if I drain my RRSP and delay my CPP until age 70 amd I die at 75? She's left with no RRSP and a nominal CPP survivor benefit
The CPP part is certainly a risk to start late. But the general idea is to empty out your RRSP / RRIF and LIRA / LIF before you die. The money that comes out of those LIF / RRIF accounts need to go into your TFSA or taxable accounts. Hence all that money will go to your spouse tax free after you die.
You can put in up to your limit but it can grow to an unlimited amount if you invest it optimally. That’s where you get the advantage, all of that growth is also tax free!
It would appear this couple has saved far too much with over 1.2M left in their TFSA :) At least CRA won't get it since they had drained their RRIF's early
Is there a very simple way to explain why an RRSP is even a good idea? Unless you make a lot of money (for me, that would be over $80k) ? I use TFSA and will never use RRSP unless I could be convinced it would be worth it. Admittedly, I'm not savvy when it comes to financial planning.
If your tax rate today is higher than what your tax rate would be in retirement, use the rrsp and make sure you invest the tax refund you get each year. If your tax rate today is on par or lower than what your tax rate would be in retirement, or you simply can’t see yourself having the will power to invest the tax refund you’d get from using your rrsp each year, then focus on your tfsa instead.
One thing to keep in mind is that your contributions to an RRSP go in off the top, your tax refund will be at your marginal rate (the tax rate you paid on your last dollar of income). When you take it out it's the overall tax rate that matters--the total amount of tax paid for every dollar taken out. Heck, the first (almost) $14,000 of income is totally free of tax as that is the basic tax exemption that everyone gets and those over 65 with retirement income (like a RRIF) get another $2000 tax free. it's only after that you start paying any income tax at all. Simplified, using only the basic personal exemption and the retirement income deduction, at $49,000 income, in Ontario, you pay a combined federal/provincial income tax at 20% but that's only after you are over $16,000 of income for over 65's. That is an overall tax rate of 13.5%. So even for someone making $50,000 a year there is still an advantage to an RRSP, not a huge one but it's there. If your income in retirement is say $35,000 a year then your overall tax rate would be about 11%. In at 20% and out at 11% is still not a bad thing. (At about $53,000 of income your marginal tax rate goes to almost 30% and the math for those contributing to an RRSP gets better.) Of course if you die with no surviving spouse and all your money is still in your RRSP then the income tax rate your estate will pay will probably be higher, maybe much higher, but if that happens it won't really be an issue that will affect you personally. Everyone's circumstances are different and you need to think it through but I wouldn't dismiss RRSPs out of hand based on what might be a faulty assumption.
I mean I contributed to an RRSP from age 23 for 15 years because the company I worked for matched dollar for dollar . 9% for 9% of my lower salary at the time..
The yearly contribution limit is additional every year to the total. The contribution room this year was $6500 however, if you've never contributed to the TFSA, you can deposit $88,000 today and max out your available room. Also, his example is a couple so that $20,000 could be split between both TFSA's.
It's not necessarily just a contribution, it is likely the growth in value of the investments plus any contributions they make. Pretty easy to get at least a 5% return with dividends.
I don't know why anyone would want to recommend bringing down the TFSA to the zero first, before the RRSP?
General logic is too use up the RRSP first before you touch your TFSA and start taking your CPP,
I'm also not a fan of not taking your CPP and OAS after 65 yrs old - reason is who knows when your going to die and its a fact that you will spend less as you get older.
Most plans we see from the banks have the TFSA drawn first. No idea why.
As for CPP timing - personal preference. Based on life expectancy delaying will give you more.
It would nice to see some videos with content that’s not based on everyone retiring at 65. Some people retire decades earlier so RRIF’s, CPP, clawbacks etc etc don’t apply for decades.
Grateful to you channel and the solid information provided! I'm in my early 40s and my TFSA has been maxed since inception in a self-directed Brokerage. RRSP i've only contributed enough to lower my Tax Bracket one level.
My Goal is a minimum $1M TFSA by retirement, and live off the tax free dividends (in addition to other investment vehicles and pensions) and laugh all the way to the bank. Everyone should try to have their own strategy that works best for you so you never rely 100% on CPP/OAS which is pitiful if you want a good comfortable retirement.
Adam. I am never disappointed hearing your videos. Never!
Thanks Ron! Greatly appreciate it.
The TFSA is magic in its own way.
Some of us don't have a lot of room left in our TFSA accounts, I have about 35,000. I do plan on maximizing it. But as of now, my investments are still not making much in returns, my TFSA is only at 1.4%. So I've left my cash in a high interest savings account. Again, the issue is that the bank account generates interest ..and it's taxable. I work part-time now, have a DB pension , an RRSP meltdown at 60 will just make more income taxable .it will also force me to stop working. My dilemma is taxes.
At 65 my bridge drops off..CPP will be higher than the bridge, OAS will be clawed back. I'm not sure how many videos have Mr & Mrs UA-cam having $400,000 in RRSPs, but most people I know don't have that much saved up. I don't. Everyone has a different scenario , but I would like an analysis of people who have one or 2 DB pensions.
Many small biz owners or self employed don’t have RRSPs. We ran numbers with CA for yrs who said didn’t make sense for us either pre or sale/retirement.
Is there any way to collapse a LIF faster than the max percentages? They are designed to make it last to age 90ish and I'm sure I won't :)
Consider: after the TFSA the only remaining tax free asset is your primary residence. Should I activate our RRIF at 65 and use the income to move to a nicer home? The intention is to create a larger tax free estate for my adult children.
The caveat is I would need roughly a $200K mortgage.
Thanks for your presentation. A prospective you seem to avoid is couples retiring at different times. I have retired and drawing from my RRSP. The drawings are going straight into my TFSA. Once my TFSA is maximized, should I top up my wife's, she is 5 - 7 years from retirement.
You bet! Have a few video scenarios like this. Try and spread out the base case scenarios as much as possible. Will have a spread in retirement age video soon.
This was a great explanation thanks
It seems that most of the taxes saved benefits the estate. looking a the taxes actually payed buy the individuals while they were alive, were $446,311 in the non-drawdown scenario and $492,196 in the drawdown scenario. In fact the figures shown here has the net worth at age 86 higher for the non-drawdown. I'm in my 2nd year of drawing down my RRSP/RRIF because theoretically it makes sense but the numbers in this video has me wondering if it mainly benefits the for estate.
Adam, I enjoy your videos. Very informative. Just curious in this example when you state the extra money gets funded back into the TFSA and I see some of the contribution figures raging from 25-36k per year. 2024 limit is 7k or 14k for the couple. Are you expecting a large increase in contributions down the line to 36k?
Awaiting your reply.
Thanks.
Hello Adam have set up getting CCP And OAP as well as A DB pension which half is a LIF pension ,I find this is giving me enuf month income to pay my bill right now at 67 but get hit yearly with the tax from them all ,right now I am taking 60% of my LIF to pay taxes ! I also have quite a bit in RRSP and TFSA and cash (GIC and GIA ) which I have not touch and some generate income which adds to tax bill ! I think but not sure that I will never be able to use RRSP Or saving unless I live to my 90's And advice on how best to deal with this ? I do not have and deductions and am widowed . Thanks
Hi There, I'm a fervent follower of your website and the detailed information you provide. I also recommend your planning advice to my friends and colleagues. I pride myself on being up-to-date and following investment advice quite diligently. Unfortunately, I made a rookie blunder and overcontributed to my RRSP - I know! I did some research and I'm definitely on the hook. What is the best course of action to rectify this issue? I'm not capable of filling out that complex T1#$#$ form. Do I call Raymond James and make a withdrawal equal to the amount I over-contributed, do I simply submit my taxes, and see what the NOA says, or do I call the CRA and get them to do the calculations after submitting my taxes. I really appreciate your advice - I feel a little silly on this one.
Max both if possible and work with a good fa to max tax efficiency.
Hey Adam! Please do a video on what people need to do with said financial plan in their hands when one retires. IE How one executes the plan.
Comes out Monday!
Please include tips to manage GIC's at multiple institutions to maximize the 100k CDIC protection and RRIF withdrawals from multi year GIC's
I have a RIF and a LIF. because my pension plan was federally regulated I could put 50% in each. In the melt down scenario I am limited in my LIF yearly to small percentage while my RIF is unrestricted . Consequently I will run out of RIF before I run out of LIF. Could you post a video on how to deal with this effectively. I am 63 my wife is 60 and we have our tfsa's maxed out and a lever account. Thank you really appreciate your videos.
I understand you do not need to convert your LIRA to a LIF until age 71 when you can convert 50% of it to a RRSP/RRIF but maybe you have already done this.
Just make sure to take the max LIF every year.
Where can I find/purchase a spreadsheet tool like this? I get the logic, I need to run the numbers.
The one we use is industry use only unfortunately.
Any recommendations for simple free or moderate cost calculators for TFSA/RRSP & tax withdrawal strategies for the math challenged among us?@@ParallelWealth
what if you plan to retire beffore 65
What concerns me here is what if one of them dies before they start collecting CPP and now they have pretty much drained their rrsp’s. It seems to me that because the one survivor will receive very little more monthly funds from the government over and above their own CPP, they may struggle financially going forward.
Very good point. I wonder the same thing. My partner is 7 years younger than me. What if I drain my RRSP and delay my CPP until age 70 amd I die at 75? She's left with no RRSP and a nominal CPP survivor benefit
The CPP part is certainly a risk to start late. But the general idea is to empty out your RRSP / RRIF and LIRA / LIF before you die. The money that comes out of those LIF / RRIF accounts need to go into your TFSA or taxable accounts. Hence all that money will go to your spouse tax free after you die.
How is he contributing so much to his TFSA each year? Isn't that above the annual limit?
You can put in up to your limit but it can grow to an unlimited amount if you invest it optimally. That’s where you get the advantage, all of that growth is also tax free!
Looks like it's yielding ~5% plus 2x the max contributions each year which are inflated. They've obviously saved too much!
I can’t believe people spend that much money. I only need Max 22000 a year and I’m quite content. 😊
It would appear this couple has saved far too much with over 1.2M left in their TFSA :) At least CRA won't get it since they had drained their RRIF's early
Is it true the about 2/3 of Canadians will not receive any work pensions (RPPs)? And less and less businesses are offering them?
Correct
I feel sorry for the people working several part time jobs, they have no work pension in most cases.
Is there a very simple way to explain why an RRSP is even a good idea? Unless you make a lot of money (for me, that would be over $80k) ? I use TFSA and will never use RRSP unless I could be convinced it would be worth it. Admittedly, I'm not savvy when it comes to financial planning.
If your tax rate today is higher than what your tax rate would be in retirement, use the rrsp and make sure you invest the tax refund you get each year.
If your tax rate today is on par or lower than what your tax rate would be in retirement, or you simply can’t see yourself having the will power to invest the tax refund you’d get from using your rrsp each year, then focus on your tfsa instead.
@@BusterDarcy RRSP can also be withdrawn tax free up to your personal amt if you retire early or take time off
One thing to keep in mind is that your contributions to an RRSP go in off the top, your tax refund will be at your marginal rate (the tax rate you paid on your last dollar of income). When you take it out it's the overall tax rate that matters--the total amount of tax paid for every dollar taken out. Heck, the first (almost) $14,000 of income is totally free of tax as that is the basic tax exemption that everyone gets and those over 65 with retirement income (like a RRIF) get another $2000 tax free. it's only after that you start paying any income tax at all.
Simplified, using only the basic personal exemption and the retirement income deduction, at $49,000 income, in Ontario, you pay a combined federal/provincial income tax at 20% but that's only after you are over $16,000 of income for over 65's. That is an overall tax rate of 13.5%. So even for someone making $50,000 a year there is still an advantage to an RRSP, not a huge one but it's there. If your income in retirement is say $35,000 a year then your overall tax rate would be about 11%. In at 20% and out at 11% is still not a bad thing. (At about $53,000 of income your marginal tax rate goes to almost 30% and the math for those contributing to an RRSP gets better.) Of course if you die with no surviving spouse and all your money is still in your RRSP then the income tax rate your estate will pay will probably be higher, maybe much higher, but if that happens it won't really be an issue that will affect you personally.
Everyone's circumstances are different and you need to think it through but I wouldn't dismiss RRSPs out of hand based on what might be a faulty assumption.
I mean I contributed to an RRSP from age 23 for 15 years because the company I worked for matched dollar for dollar . 9% for 9% of my lower salary at the time..
@@ddavidson5 There is also a 8400 age amount at 65 so the total personal amounts would be over 25k. A couple could make ~51k complete tax free
How can someone contribute over $20,000 a year to a TFSA when the yearly contribution limit is less than half that?
The yearly contribution limit is additional every year to the total. The contribution room this year was $6500 however, if you've never contributed to the TFSA, you can deposit $88,000 today and max out your available room. Also, his example is a couple so that $20,000 could be split between both TFSA's.
It's not necessarily just a contribution, it is likely the growth in value of the investments plus any contributions they make. Pretty easy to get at least a 5% return with dividends.
Combination of growth at 5-6% plus the TFSA room has grown with the CPI to over 20k in there later 70's