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How much do you know about financial independence?

April 21, 2023, 8:54 p.m.
Posts: 18882
Joined: Oct. 28, 2003

Posted by: XXX_er

If you have a pension this is good news

PENSION PROTECTION BILL C-228 TO BECOME LAW!

https://www.parl.ca/legisinfo/en/bill/44-1/c-228

that makes me feel much better for my sibling, who is relying on a "too big to fail" company pension.


 Last edited by: heckler on April 21, 2023, 8:56 p.m., edited 2 times in total.
April 21, 2023, 8:55 p.m.
Posts: 18882
Joined: Oct. 28, 2003

https://srv111.services.gc.ca/generalinformation/index

here's a fun one for a Friday night.

April 26, 2023, 3:20 p.m.
Posts: 16032
Joined: Nov. 20, 2002

don't forget your income tax is due !

It was so easy with Wealth simple last year but this year they did not auto-fill all of my T-1 like it has done in the past

so i had to wank about finding/ inputing some slips by hand

then i got a large tax bill cuz the investment firm doesn't with hold any taxes on RIF $$$$

which is i guess > CRA having my money but its definatly enough to give ya a sweaty crotch

edit: so proof positive all those RRSP contributions eventualy DID get taxed, I will have to do a little math and see if i actualy saved any tax altho I continuously  quit buying RRSP 18 yrs ago so I wouldn't have too many


 Last edited by: XXX_er on April 27, 2023, 11:47 a.m., edited 1 time in total.
May 3, 2023, 2:40 p.m.
Posts: 495
Joined: Feb. 24, 2017

I contributed to my RRSP for many years just like everyone told me I was supposed to. I stopped contributing when I realized I may end up in a higher tax bracket once I am forced to start taking money out.  First world problem I guess.

May 3, 2023, 2:47 p.m.
Posts: 14950
Joined: Feb. 19, 2003

What's wrong with being in a higher tax bracket once you start taking it out?  It's a marginal increase.

Or are you running the math on wanting to spend it now vs spending it later?

May 3, 2023, 2:51 p.m.
Posts: 2327
Joined: Sept. 10, 2012

Posted by: skooks

I contributed to my RRSP for many years just like everyone told me I was supposed to. I stopped contributing when I realized I may end up in a higher tax bracket once I am forced to start taking money out.  First world problem I guess.

I theoretically could have the same issue, but it would mean enjoying great returns between now and 71. That's not really a problem. It's just winning too much. I won't complain if that's my situation.

May 3, 2023, 3 p.m.
Posts: 16032
Joined: Nov. 20, 2002

the banks tell you the RRSP is a good idea and they give their bank officers quotas which they fill even tho they know its not always good for the customer,

the idea was that you buy em when you make lotsa money to reduce taxes and cash em in when you are old/ making less money

but if yer old and making lotsa money there is no tax saving

at some point just buy something beside RRSP


 Last edited by: XXX_er on May 3, 2023, 3:14 p.m., edited 1 time in total.
May 3, 2023, 3:02 p.m.
Posts: 16032
Joined: Nov. 20, 2002

the whole point was to pay less tax on money you made in yer youth by taking it out when yer old and not making as much money, the banks tell you the RRSP is a good idea and  they give their bank officers quotas which they fill  even tho they know its not always good for the customer,

at some point just buy something else

May 3, 2023, 9:59 p.m.
Posts: 18882
Joined: Oct. 28, 2003

RRSP is not something you ‘buy’.  It is a type of income tax deferred account.   If you currently ‘buy’ RRSPs from your bank teller, lets talk.  

RRSP is also not something that you must wait till you're ‘forced’ to take out a high taxable income.   Its a tool, when used properly, to reduce lifetime income tax.

My plan is to take 10-15k RSP out per year between 50ish(?) and death, supplementing a new lower but funner work, dividend or CPP income to keep me under the first or hopefully second tax bracket.  I’m just working with a big bank financial planner to get a free second opinion, and its already quite obvious he knows I’ll ignore his sales pitch.  

And yes- check your CPP estimates in My Services Canada.  You might be surprised.   I was. 

https://www.canada.ca/en/employment-social-development/services/my-account.html

May 3, 2023, 10:36 p.m.
Posts: 495
Joined: Feb. 24, 2017

Posted by: XXX_er

the banks tell you the RRSP is a good idea and they give their bank officers quotas which they fill even tho they know its not always good for the customer,

the idea was that you buy em when you make lotsa money to reduce taxes and cash em in when you are old/ making less money

but if yer old and making lotsa money there is no tax saving

at some point just buy something beside RRSP

Yeah that's the conclusion I came to as well.

May 4, 2023, 6:42 a.m.
Posts: 879
Joined: June 17, 2016

Posted by: heckler

And yes- check your CPP estimates in My Services Canada.  You might be surprised.   I was. 

https://www.canada.ca/en/employment-social-development/services/my-account.html

I'm not sure how Services Canada gets to their estimation, I think it assumes continuation of your current income in the future. If you plan to (semi-)retire early it might not be accurate.

There is a spreadsheet you can download from the link below in which you can enter your CPP contributions so far (which you can also find on the Services Canada website) to calculate how much CPP you have actually built up. It gives a much lower number for me than Services Canada.

https://www.finiki.org/wiki/CPP_and_QPP_calculator

May 4, 2023, 7:35 a.m.
Posts: 2327
Joined: Sept. 10, 2012

Posted by: [email protected]

I'm not sure how Services Canada gets to their estimation, I think it assumes continuation of your current income in the future. If you plan to (semi-)retire early it might not be accurate.

That Gov't calculator does assume you'll keep working at the same rate as you have in the past until you take your CPP. So for anyone that downshifts or retires early it will give you a number that's too high.


 Last edited by: Vikb on May 4, 2023, 7:51 a.m., edited 1 time in total.
May 4, 2023, 8:57 a.m.
Posts: 34104
Joined: Nov. 19, 2002

Posted by: heckler

My plan is to take 10-15k RSP out per year between 50ish(?) and death, 

Depending on the amount in your RSP, that amount may be more when it turns into a RIF.

May 4, 2023, 9:35 a.m.
Posts: 16032
Joined: Nov. 20, 2002

Posted by: heckler

RRSP is not something you ‘buy’. It is a type of income tax deferred account. If you currently ‘buy’ RRSPs from your bank teller, lets talk.

RRSP is also not something that you must wait till you're ‘forced’ to take out a high taxable income. Its a tool, when used properly, to reduce lifetime income tax.

i had 3 relatives working banks, anyone above a teller with an office has a quota's to sell you their products so the bank can take that money and lend it out to make money on the spread between deposits and money lent out, in return you get a tax deferral, if that isnt buying an RRSP I duno what is ?

I spent a lot of time working in all the banks, its a different perspective hanging out when you are not the customer, i might hit 2 or 3 different institutions in a day, it was always good to pick their brains, I asked a couple of guys about mortgages and they said do this and it turned out to be good advice

Another time I forget the philosophical discussion but the punch line was " we are all just selling the same 250-300 products " So buddy the bank officer sure thot he was selling bank products and so he was telling me the 6 big banks were all just selling the same stuff

I am pretty sure you must RIF an RRSP before age 71


 Last edited by: XXX_er on May 4, 2023, 1:25 p.m., edited 6 times in total.
May 4, 2023, 12:29 p.m.
Posts: 2327
Joined: Sept. 10, 2012

Currently your mandatory withdrawal from your RRSP-->RRIF at 71 is 5.28%. So with a $500K account that would be $26,400. You are required to convert your RRSP to a a RRIF by the end of the year you turn 71 and withdrawals need to start at the beginning of the next year. You can use your spouse's age for the mandatory withdrawal % so if they are younger you can lower the amount you have to take out.


 Last edited by: Vikb on May 4, 2023, 12:29 p.m., edited 1 time in total.

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