A New Way to Optimize Your Retirement Withdrawals
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- เผยแพร่เมื่อ 28 ส.ค. 2024
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There's a tonne of retirement experts on TH-cam working toward the same goal- educating people that timing their retirement withdrawals is one of the MOST IMPORTANT processes in financial planning. Well K4 is aligning with the robots, as there is simply no fighting the rising tide. And man, they can be thorough.
Here we try out a new software that optimizes planning for retirement by running a million billion scenarios to find your optimal drawdown strategy. This reveals a case study in which a (potentially famous) client has particular retirement income goals to meet and how the change of investment strategies can help meet those objectives. It demonstrates the importance of a tax-efficient withdrawal strategy and the timing of CPP and OAS. Because at K4, we embrace the future!
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00:00: Classic Kent Intro
01:13: Here Comes the Future
02:14: Don't Fight The Math
04:00: Case Study: Planning for Jennifer Aniston (Not the Celebrity)
06:13: Jennifer's Financial Profile and Goals
08:26: Optimizing Jen-Jens Retirement
10:07: Adjustments to Hit Our Targets
12:20: Bird's Eye of the Strategy
14:59: Tempering Your Risk vs. Your Timeline
16:14: All Hail Our Robot Overlords
Contact us at info@k4financial.ca
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This presentation is just meant to provide information. The accuracy of its contents has been ensured using every available means. Certain statements made may contain forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that could cause the Company's or the industry's actual results, performance, or achievements to differ materially from any projected future results, performance, or achievements. Returns are not certain, and performance in the past might not be replicated.
The content on this channel is provided solely for informative and educational purposes and does not represent investment advice.
The hosts are not liable for the viewers' financial decisions, and their content shouldn't be used as a foundation for investing transactions.
Nice, a case where it’s a single person and not a couple. Good job!
🤯 I have to say,I’ve never heard of this approach ever. I’m getting my solar powered 1983 scientific calculator out.🤓
Have fun 😎
Another great video. Really enjoyed this one and encourages me to consider having you guys run my numbers
Nice one! I have a lot of time at home as I am on disability right now. I am 59 this year and look in earnest at more of your videos! Thanks
Very nice video with detailed oriented explanation of optimization of a great Financial plan including the withdrawal amounts yearly. Many Thanks, Kent.
I would like to see you run a scenario with life expectancy reduced to 85, which is more realistic. One spouse dies in their early 70s and the house is sold by the survivor at Age 82. This should leave plenty of cash for the estate and a much larger annual funds for the couple.
Your conclusion about CPP at Age 68 falls in line with my calcs and conclusions. I'm approachng 67 with plans for taking CPP at 68.
One of those with time to watch! lol. ☝Thank for this update. Lots to think about.
Kent thanks for the content. Gets the mind rolling on options . Talk soon , looking to reach out when my wife gets closer to retirement .
Great series oilers/ Canucks . You guys finished it up .
You’re welcome.
Sounds good.
Yeah, it was a nail biter. Great series.
You’re welcome.
Sounds good.
Yeah, it was a nail biter. Great series.
Your TH-cam channel is amazing! The content you create is instructive and informative, The production quality, creativity, and passion you put into your videos are evident in every frame. you are keeping me hooked with every video. Keep up the fantastic work, you're doing a fantastic job!
Awesome video Kent
Thanks
Great video. Does your software consider sequence risk in the investment returns or apply the same ROI year after year?
You can. I didn’t there.
She would certainly have some significant sequence risk that we’d have to discuss.
That makes sense.
I'm struggling with how these software programs account for a larger RRSP with a good size non registered account that generates capital gains and dividend income. The dividend income grosses up the marginal tax rate, and combined with capital gains means a much higher marginal tax rate for RRSP withdrawal. How does one practically manage to be able to meltdown the RRSP enough to both minimize overall taxation and maintain income below OAS thresholds? Can you put assumptions into this AI software to account for the type of investment income (dividend, interest or capital gain)?
Am I correct in thinking that the Federal exemptions currently for 2024 of 15.7K personal exemption, an 8.8K age exemption, and a 2K RRIF exemption are not accounted for in this scenario. For ages 65 - 67, I believe you can increase the RRIF amounts to 23.5K, 24K and 24.5K; keep the LIRA the same and reduce the Non-registered, so that the total income for 2024 is roughly 54K and then 55K and 57.5K for 2025 and 2026; and pay no taxes she would be entitled to these Federal Exemptions. This would leave you with a larger estate
They’re accounted for in the software. Also, they’re credits, so you can’t have that amount of income and not pay taxes.
If your goal is to have a maximum estate at a certain year, it will change the structure.
What we have to realize is that we can choose our goal, but all of our assumptions will be wrong, so we cannot get this to be perfect. We just have to be smart about our decisions and if you are in good shape, it will be fine.
I had you guys do one of your $500 plans last year before I retired. I retired in January. Should I have it done again with the new software?
Hi Kent. We’ve been watching you for a long time. We appreciate your channel a lot. We are interested in your decumulation strategy and would like it if you could contact us to set up an appointment. my husband has been retired for three years now (I’m still working full-time ) and I’d like a refresher of sorts just to make sure we’re on the right track and to get an idea of when I can retire comfortably. (I am 10 years younger.) I hope to hear from you.
Hi Kim, you can just email us anytime at info@k4financial.ca
Looking forward to hearing from you
I'm curious about the effect on CPP of reducing salary to 80% between ages 61 and 63 (4 day work week) . Also, the effect on CPP of reducing from 80% of full time to 50% of full time from age 63-65 (2. 1/2 day week versus retiring at 63). Additional presumption: delaying collecting CPP 2-5 years past 65.
Tough to say. Depends on your salary and past contributions. Could be nothing, but likely a bit of a reduction.
It does seem that there is some estate risk with this plan in that should Jennifer pass in her late 70's or early 80’s the estate will be saddled with some higher taxes on the outstanding balance in the RIF account. I think that’s the drawback from shifting to TFSA withdrawals in the early years vs the RSP meltdown strategy. I’m curious how much this platform considers estate taxes upon death in terms of planning the withdrawal strategy?
You can’t have it both ways. If you want to plan to have a higher estate value at 75, then the plan shifts completely.
That’s why you should never do a plan like this at any age and use it as your absolute guide, because things change all of the time and you need to be able to adapt and adjust accordingly.
Also, Jen doesn’t have kids, so she doesn’t care.
Hi Kent, enjoy your channel. I’m looking at Jennifer’s drawdown numbers at 12:00 min mark of video. She’s 90% max CPP and 100% OAS. Increases are based on CPI of course. 11:58
Software has her Age 68 at $17,254 and $10,152 CPP and OAS respectively. Age 69 is $19293 and $11,351. Those are 11.8% increases in one year. Is this a flaw in the software and If so, does this flaw skew Jennifer’s income numbers each year going forward?
It’s always a little skewed in the first year because of when the birthday falls. I thought it would be normal if I put her birthday on January 1, but it’s just because it doesn’t show her first payment until the next month.
Thanks Kent for another thought provoking video! Is it a correct assumption to believe that CPP and OAS will be guaranteed in the future? With the increased number of people retiring and drawing on this pool and the reduced number of people contributing to the pool, how can we think that it is 100% guaranteed? Even as the government continues to mandate and siphon higher contribution rates from employees and employers, it stretches my sense of reality to believe this income stream is guaranteed. Is there a way to put a degree of probability (80% ?) into the model to account for this uncertainty?
Well, for OAS, I have no clue as that would be political suicide to get rid of it, but it’s certainly not affordable for the country considering they are always going further into debt.
CPP appears to still be good for 75-years, but who knows how that would look if there’s a huge market correction?
I’d have to manually adjust it to account for things like that. Sometimes we have to just have some optimism and I am optimistic in the people of this country to do the right things over time.
We had over 330,000 deaths in 2023, that is not an unusual number for Canada, this 330,000 are no longer going to draw OAS. We have 7,500,000 over 65s in Canada , an actuary could have helped predict the level of OAS draw for the government. Cheers
Some detail seems missing, unexpected expenses ie, new roof, car, maintenance, new furnace etc.
Jennifer Aniston doesn’t have unexpected expenses
@@K4Financial True, but this is her twin sister who couldn't break into Hollywood.
@K4 - Seems like Canadians are all over the map on fees, anywhere from 0.5% to 2.5%. so just wondering how that factors into assumed RoR in projections? I'm guessing 4% is just for the scenario tho eh?
There’s a video somewhere on our channel about how we assume the returns. We use the FP Canada projections guidelines for the year, minus the fees you are paying.
House for 450,000!? Hmm, where is this? Is she selling it?😊
@@gordonpi8674 Edmonton is still relatively inexpensive
@@K4Financial aah, ok, that’s understandable
Not retired, but a little FIREy. Does RRSP meltdown income count as pensionable earnings for CPP?
As far as I know pensionable earnings must come from employment income. As an example: People that have their own incorporated business and take all their income as dividends also do not contribute to CPP based on that income.
well that's a little heartbreaking
Keep working.
To be considered "pensionable earnings" the funds much come out of a RIF or LiF not just an RRSP...that's my understanding.
@@kcirdorb9591 I don't think so. I took out money from my RIF & LIF for a few years before I started my CPP and before I turned 65, if that was "pensionable earnings" I would have been required to make CPP contributions. That didn't happen.
Very interesting. Maybe Adam’s plans are cookie cutter. He likes the RRSP meltdown strategy. Perhaps it’s not one size fits all.
Never has been one size fits all. Meltdowns make way more sense when you have a large RRSP. They make less sense if everything is the appropriate size.
@@K4FinancialThat makes sense.
Robert, our plans are the furthest thing from cookie cutter. We probably spend more 'people hours' per plan than most looking at different scenarios and strategies. The RRSP meltdown makes sense most of the time, but not always. Each plan is different and built that way. Are there strategies that work well for most, sure. But the intricacies of the details is what matters.
@@ParallelWealth oh, I’m sure they’re not. Nobody is the same, so they never can be.
@@ParallelWealthGood to hear you spend a lot of hours tweaking plans to ensure they match client needs!
Do you have partners in the US?
Do yourself a favour. Play at 1.25x …just sayin’
I'm struggling with how these software programs account for a larger RRSP with a good size non registered account that generates capital gains and dividend income. The dividend income grosses up the marginal tax rate, and combined with capital gains means a much higher marginal tax rate for RRSP withdrawal. How does one practically manage to be able to meltdown the RRSP enough to both minimize overall taxation and maintain income below OAS thresholds? Can you put assumptions into this AI software to account for the type of investment income (dividend, interest or capital gain)?
@@christinee8353 it calculates it if you put in the way the income is generated properly.
Problem with that is that you don’t know what the market is actually going to do. Some years are great and others, not so much, so you can only trust the software so much and you will probably need to manually calculate things near the end of the year.
We are looking into a new software that is quite complex and can apparently handle anything, so if we switch I’ll start showing some examples of different scenarios.
Also, sometimes, trying to avoid OAS clawback is fairly pointless, because in trying to avoid it you cost yourself returns.