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I agree Jim, at the end of the day CRA will get their money anyway and if people choose to never withdraw, it just means more tax for the government on death. That said the current administration (at any time) wants their revenue ASAP.

@ Contact the finance minister then please. The more people who voice their opinion on this the greater the chance there will be some changes.

The IIAC and CALU are currently lobbying for changes to the RRIF minimum. They will not get rid of it, but we are hoping for some changes, including an increase in the forced minimum age and potentially exempting a certain minimum balance from mandatory withdrawals.

@ Thank you for that every canadian with an rrsp should hope this works. I contacted the minister of finance but she basically gave me the brush off.I am sure that any political party which does or will do what i am saying or even partially will get my vote and i don’t care which one it is.

@ I googled CALU abut nothing came up.

Yes, you absolutely can! For RRIFs' there is only a minimum withdrawal, no maximum and just like an RRSP you can withdraw at anytime.

That is a good point! On the other hand though, hopefully, your account is growing faster than inflation. And if you are moving any excess contributions to a TFSA, the earlier it gets there the longer it will grow tax-free. Again, every situation will be unique.

This could depend on the institution. They may have a process for selling, or you may enter a debit position.

TD bank says they will sell some securities if you don't have enough cash to cover the minimum required withdrawal. Check with your bank.

You can transfer your holding inkind from your RRSP to RIFF. You just have to have enough cash for the withholding tax if you withdraw over the minimum

This sounds great in a perfect world. Unfortunately, most people don't have the option to retire early. And don't forget, any money in your RRIF or RRSP has been avoiding tax since you contributed to your account. You never paid tax on that money and it has been growing tax-free (hopefully). And if you are in a lower tax bracket than when you were working, this "Deferral" of tax has paid off even though you have to pay tax now.

My plan is not for a perfect world, it doesn't exist. Most people don't focus on extreme early retirement. My comments would only work for younger people reading this and making the required moves to retire in their forties. The Government system is built for the masses, you need to think differently otherwise you will be where others are...... right where the government wants you. Dying before you fully withdraw it all and give back 50% of your RRSP, likely in a higher tax bracket than when you contributed the money to the plan.

I won't disagree that taxes are much higher than I would like to see! That said, they are still a lot better deal than the alternative of putting after-tax money into non-registered investments where you pay tax on your realized gains, dividends and interest every year. They are even a better deal than TFSAs if you take the money out in retirement in a lower tax bracket than when you were working. 30% is just a withholding tax. The amount of tax you pay on those withdrawals is dependent on your marginal tax rate in the year of the withdrawal.

Yes thanks @louisclarke4646. We typically recommend using the youngest spouse's age to allow for more flexibility.

This is true, though many non-bank firms will not charge you a deregistration fee for withdrawing from your RRSP.

Hello, thanks for bringing this to our attention! Here is a link to the previous video: th-cam.com/video/T5NZoOURfrM/w-d-xo.html. We also have a website with links and relevant articles here: www.retirementplanningsimplified.ca/blog

Good job educating yourself. Keep it up so you don't go into retirement blind!

Thanks for watching

It's a good spot to be. The important thing is that you are doing what you want and not missing out because you are scared to spend.

While it can be as simple as you want to make it. The reality is that making decisions in this fashion can cost you thousands or even hundreds of thousands of dollars over your lifetime. Delaying CPP is never about spending less in early retirement. It is about where will I take my income from to live my best early retirement years. Additionally, the bonus for delaying from 65-70 is actually a greater benefit than from 60-65.

Thanks for the comment! To be clear here, the advice is not about avoiding spending now. Almost everyone we work with wants to spend more money early in retirement. We are working to help our clients and educate consumers on how best to meet their goals, minimize the taxes that both they and their children will pay and not outlive their money. There are many variables that go into this, and unfortunately, the situations we see that do not turn out as desired are often scenarios where decisions were made based on feelings, opinions or advice from unqualified family members that never accounted for the big picture.

@@retirementplanningsimplified . Appreciate the reply 😊👍. I would be the unqualified family member 😬.

@@autumna4270 LOL I love the honesty

Haha! Very well said. A bird in the hand….Remember…our caring Canadian government wants you dead as soon as you retire. That way you don’t collect. In my opinion, get YOUR money while you can!

Bingo. I'll be taking it at 61.

Thank you 🙌

This is something that works for many people but I also have a lot of clients who need millions more to match their lifestyle. Our point is really that you can't just read an article that says $1M is enough to retire and assume that works for you. Each person needs to explore this on their own, given their own situation and goals.

Thanks for your comment. While the Harper regime did implement a delay in OAS, it was later canned by the Liberals in 2016. There are no plans to change to age 67 retirement for OAS as of right now. You may have seen other headlines showing that in the US they will be delaying Social Security to age 67 by the year 2027.

My thoughts Exactly.

Garth217, these are all great points. A couple things I would note here: 1. You have to remember that a video like this needs to remain more general, understanding that each individual will require personalized advice 2. While people do tend to slow down as they age, we still have clients in the 80's travelling the world. When our clients see they will likely never run out of money, they also tend to start gifting to their children more regularly. But again, each situation is different. 3. Taxes consequences will be drastically different depending on the situation. Sometimes delaying will alllow us the opportunity to withdraw additional fund from RRSP/RRIF before 70 which actually lowers the future taxes payable. That said in most cases where we are running into OAS clawback, this decision is less important and has minimal impact on your retirement outcomes. 4. I have no argument that if you die before expected, delaying CPP will not be the right choice. But just like buying term life insurance to protect your family would appear to be the wrong choice financially if you do not die, does not mean it was a bad decision. The main point about delaying your CPP is that it serves as longevity insurance. Thank you for commenting! You have been doing your homework!

​​@@retirementplanningsimplified thanks for the reply. Education is the key. You need to apply your own circumstances to the situation and make informed decisions. I just applied yesterday. CPP will start at 61.

Well said and explained. Thank you!

@@garth217 great answer. I'm leaning hugh to take cpp by 61 in 10 months time.

I retired at 66 with 1.1M and 150K Iin liquid cash as well as debt free debt free our income with SS and 14K per year pension income...my income over the last 15 years of working was an averaged 150K.. After 10 years our taxable retirement fund have not gone down after 4 rmd's.

1. It does consider the CPP received from 60-70. 2. Shrinkflation is incorporated into the Consumer Price Index calculation. Hope that helps!

Hi Mike...I appreciate all the detail here. The problem is that projections are wrong the minute after you create them. The numbers also vary wildly depending on your retirement income style comfort level, longevity, timing of market returns etc. One of the biggest issues is Sequewnce of Returns risk which I address in this episode: www.retirementplanningsimplified.ca/blog/ep-6-retirement-risk-1-sequence-of-returns-and-why-the-game-changes-in-retirement Additionally, you can learn about other retirement risks here: matthewsandassociates.ca/top-5-retirement-risks

@@retirementplanningsimplified Of course, that's a given. But if the projections were completely useless a minute after creation, then certainly no one would ever pay thousands for them, right? 🙂 Yes it's understood that things change, but the reason planners do plans and people want them, is because it can provides an idea of what is possible, given the (hopefully conservative) assumptions.

@@mikechr88 They certainly have their place, but if you are paying a planner thousands, and only getting projections I would ask for my money back.

Thank you!

Thanks Philip - I would agree! Hopefully that was conveyed in this episode. There is a lot more that goes into it. The 4% rule was based on research that assumes a tight asset allocation, hard stop of 30 years in retirement and doesn;t consider any of the costs related to investing or variability in spending, among other things.

Thank you for sharing! Fantastic that you've not only retired from something but to something. And that you find it rewarding.

Noted!

@nh154321 - This is a great question with a lot of debate. However there has recently been some great research around this topic. Without knowing your situation, I would say that in most cases the evidence would suggest that the default option should be to pay yourself enough salary to live, take a bonus on top of this to max RRSP and keep the remainder beyond that inside the corporation to invest. Keep in mind that bonus to go to the RRSP is effectively tax-free as it is offset by the RRSP contribution. The RRSP is more tax efficient than investing within the corp. Consider that you have to pay corporate income tax on anything left in the corporation to invest and then the investments within the corp are tax-free. Paying a bonus to yourself creates an expense to the corp and therefore eliminates the tax payable on that amount. There is no personal tax because you are depositing it to the RRSP and once inside the RRSP, the investments are completely tax deferred until you take money back out. There are a couple nuances where you would first pay a dividend and there is argument around CPP which are addressed in the episodes mentioned above. Stay tuned I will also eventually do a video specific to this topic. Watch for next week's episode (#93) with & Aravind Sithamparapillai who discusses CPP strategies for business owners.

Thanks for the feedback!

It can be hard to transition from the saving to spending mindset in retirement but with good guidance it's totally possible

Our pleasure!