How much do you know about financial independence?

different article, or articles, but similiar story. Kinda concerned any time there's some grey area terms that work in the CRA's favour, even if I don't have anything to worry about

As long as you abide by the annual contribution limit you have nothing to worry about. All growth within those accounts is tax free. This is why TFSA's are so awesome. RRSP = tax deferral, you assume that the tax rate when you draw it down will be roughly equivalent to today but that's not something I would want to bet on. Yeah you get a refund and tax free growth but it will be hit eventually. TFSA = you are in the clear unless there's a massive government policy change with a wealth tax grab. You never know but I think it's unlikely.

The thinking behind an RRSP is that you'll be making less income and furthermore pay taxes in a lower bracket. Marginal rate is a lot less at $50K than at $100K.

Also, contribution limit is much higher.

The thinking behind an RRSP is that you'll be making less income and furthermore pay taxes in a lower bracket. Marginal rate is a lot less at $50K than at $100K.

Also, contribution limit is much higher.

that's a big part of it but so is earning returns on money you would have paid as tax.

5k earning 5% in a TFSA or
5K in your rrsp earning 5% and your tax return invested in your TFSA earning 5%

I think for most younger folks making decent cash RRSP's is going to be the winner every time

that's a big part of it but so is earning returns on money you would have paid as tax.

Good point.

" The trouble often starts when people turn 65. If they have a good pension and other investments to draw from, they don’t dip into their RRSPs at all at first. But when they turn 71, the government forces them to start withdrawals, and because their income is so high, more than 40% of that money could go to the taxman."

http://www.moneysense.ca/retire/top-21-rrsp-questions-answered/

With RRSP you are just deffering tax until you retire and aren't making as much money but you can have a problem with making too much money and getting taxed at the same rate as when you made the money

That's a problem any retiree would like to have.

I read that taking CPP at 60 instead of 65 can be a good idea as the break even age is in the late 70s.

I think you might be suprised how many retirees might have bought too many RRSP's, I quit buying them as soon as I quit working

A C.A. I took skiing at HBM told me to take early CPP so I applied, I get it this year … it'll pay for that new Tacoma

As long as you abide by the annual contribution limit you have nothing to worry about. All growth within those accounts is tax free. This is why TFSA's are so awesome. RRSP = tax deferral, you assume that the tax rate when you draw it down will be roughly equivalent to today but that's not something I would want to bet on. Yeah you get a refund and tax free growth but it will be hit eventually. TFSA = you are in the clear unless there's a massive government policy change with a wealth tax grab. You never know but I think it's unlikely.

But with TFSA you are funding them with after tax money.

I think you might be suprised how many retirees might have bought too many RRSP's, I quit buying them as soon as I quit working

A C.A. I took skiing at HBM told me to take early CPP so I applied, I get it this year … it'll pay for that new Tacoma

I haven't looked deep into it but I thought that the you need to live to 73 to make taking it at 65 pay.

on the other hand there spending dramatically drops as you go past 75 so you dont need the money anyway. plus you have OAS kicking in

The problem XXXer is describing holds true if you work till 65. Start spending 4% of a million - 40k per year, split 20k per partner- at 50 and you're not going to have a problem at 71. Assuming thats your total income, plus TFSA. Make sure you and your spouse have equal RSP levels - a spousal RSP is key if one makes a lot more than the other.

With 400k in an RSP at 71, you must take out ~25k per year, rising to about 60k at 88. This is still a reasonable range of income tax levels.

Granted, a 20-30 year old making 40k is better off maxing the TFSA limits before RSP. Save the RSP room for when you have a higher tax bracket.

With early cpp you get 30% less but you get it sooner, so the 70 something age is where the getting it early catches up with getting less, the C.A I talked to said to go early because I wasn't working and then he started talking about numbers and fractions of amounts and my eyes glazed over

I might have a problem with too much RRSP, I have never actualy done any $ planning of any kind, and I have no spouse to split it with

otoh when I wake in the morning I am never wrong

don't forget you can income split after 65

xxx, it behoves you to talk to a CFP. I thought when I went self directed with a major banks brokerage, I was on my own, but when I went to the bank to ask about something, the CFP there offered a free financial plan. I was pleased how there was no salespitch at all.

Ill dig up a CPP cheatsheet he gave me.