Thank you for your insights. Lots of things to consider. Since our expiry date is a big unknown, I'm thinking that perhaps the single person (in this example) should consider taking CPP and OAS as soon as he/she can so as not to leave CPP/OAS money (a life time of contributions) on the table. Especially if they want to leave some money to beneficiaries/relatives.
So many Canadians do not have a company pension plan … in fact I think not even 50 % of people have any pensions other than cpp and oas and there is people that won’t get much for cpp if they worked part time for yrs.
I have been a subscriber more than a year now and had watched all your videos and as always, I enjoy how you present your contents. Very clear explanation on this. Would you be able to show a different scenario for single without pension but RRSP, say approximately 500K at age 65 indexed to inflation?
Great info. I fit this scenario very closely with smaller pension and RRSP. Its difficult to calculate the effect of taking CPP at 65 vs 60 with increased postponement amount but the addition of 5 zero income years in the calculation
Great video Kent. The only thing I would add is how reliable the investment is depending on what you are drawing. Increasing your CPP and OAS (taking at 70) decreases your investment risk can add to more money. But it certainly adds to financial security. IMO.
The flaw in your analysis of total cash is assuming that the RRSP withdrawals are spent and not reinvested. Melting down the RRSP does not require that the cash is spent. A more fair comparison of the meltdown is to assume the cash is not spent simply moved to non-registered investments. This would give more of a true tax savings.
Hi Ken..one important piece of info regarding "how much money actually came in"...I believe your amounts are not the actual nominal dollars that would come in, but are in fact the inflation-adjusted dollars, and thus lower than the actual dollars you would see coming in.
Yeah, the real numbers would be higher. I believe I was talking about the after-tax money coming in which would be lower in the first example where they have higher income during the first stretch
@@K4Financial If I heard you correctly, starting ten minutes in, it's pre-tax over lifetime numbers you are presenting. Anyway just a comment, as when people hear they will be getting X dollars over their lifetime from source Y, they are usually thinking in nominal dollars, and the nominal dollars would be significantly higher.
Wish you would make a video, that is in my ballpark ... Iam 63 have around 50k in rsp no savings... mortgage of 60k other deat of 50k ... Want to retire next year?
A RRIF/RRIF growing in this investment climate? Wishful thinking. Mine’s getting hammered with so called ‘low risk’ investing. Thank God for my ‘gold plated’ pension.
The market fluctuates so the RRSP/RRIF balance doesn't decline linearly over time. Is it better to withdraw more during market highs and withdraw less during market corrections?
If you’re doing a meltdown in a short period of time, you should take market risk off the table if possible. As to your second point, in a perfect world you would do this, but it’s not exactly simple to execute.
You should be able to keep your rrsp and not have to RIF it at 71.This way you get to chose the amount you want not being told what to withdraw whether you need it or not in any particular year. That seems more fair to me than the current system. Maybe you could talk about that.
@@K4Financial Well because maybe some years i will have some big gains and will have a big tax bill just because of that. I won’t need money from a RIF that i can’t even chose the amount of and pay tax on that too !As you get older the mandated withdrawals from a RIF as a percentage become huge until in your 80s they become double digit percentages which will destroy your retirement fund in just a few years and i haven’t even mentioned a market meltdown which of course happens periodically.Imagine a meltdown happening and you have to withdraw money right at the bottom rather than being able wait until things recover. What a disaster in yet that is the law as it stands now.I have have to think any political party which proposes letting people withdraw funds as they see fit would get a lot of votes from seniors and there are a lot of seniors out there. Your fund is collapsed when you die and the govt takes their slice eventually anyway.I think that position is reasonable and fair.
Great video! Still I have a few question about all your or Adam's scenarious: Why most of the time you are making these scenarious for people which have a defined pension or guaranteed pension? Most of the people have only CPP, RRSP amd some contribution plans from work. Also, everything is planned to use all RRSP before you die. What if you want to leave some money to your kids?
Two parts I guess. Meltdown strategies make more sense when trying to equal out the income over life as there are more moving parts when a pension is in play. 2nd, if that’s the case then we would develop the plan based on that goal. With just an RRSP, CPP and OAS, if you wanted to leave money to your kids, then you’d likely just RRIF and take the pensions upon retirement. Not really much to it.
Most private pension plans consist of a lifetime pension amount and a bridging amount. They both start on your retirement date. The lifetime amount is there for your lifetime but the bridge amount is only there until you reach 65 and get the CPP or QPP. If all your career employment was at the same employer then your bridging should be approximately the same amount as the “CPP or QPP” amount at 65. In other word, the bridging is only there to bridge you until 65 when it is replaced by the CPP or QPP.
Thanks for running this type of scenario for a single person. ❤👏👏
No problem
I second this. Everthing else is regarding a couple with a perfect life. There are a lot more people who are not in the perfect stituation.
Great information, thank you. Great to have a single person example, too, as not all of us will have spouses receiving government pension funds.
Haha, well it was just easier to make up a scenario for a single person, so you got lucky I guess
Thank you for your insights. Lots of things to consider. Since our expiry date is a big unknown, I'm thinking that perhaps the single person (in this example) should consider taking CPP and OAS as soon as he/she can so as not to leave CPP/OAS money (a life time of contributions) on the table. Especially if they want to leave some money to beneficiaries/relatives.
Hope you are well and your separation brings some solace. Good video.😊
I’m good, thanks
So many Canadians do not have a company pension plan … in fact I think not even 50 % of people have any pensions other than cpp and oas and there is people that won’t get much for cpp if they worked part time for yrs.
I have been a subscriber more than a year now and had watched all your videos and as always, I enjoy how you present your contents. Very clear explanation on this. Would you be able to show a different scenario for single without pension but RRSP, say approximately 500K at age 65 indexed to inflation?
This would be interesting to hear how the larger RRSP without pension works!
I agree. It would be so helpful to see this for a single person with higher RSP savings.
Great info. I fit this scenario very closely with smaller pension and RRSP. Its difficult to calculate the effect of taking CPP at 65 vs 60 with increased postponement amount but the addition of 5 zero income years in the calculation
Great video Kent. The only thing I would add is how reliable the investment is depending on what you are drawing. Increasing your CPP and OAS (taking at 70) decreases your investment risk can add to more money. But it certainly adds to financial security. IMO.
Nice to see real numbers and different scenarios. As you say no plan is perfect…
Well done Ken !
Great explanations and well done video...!!! Thanks Kent....!!!
Nice watch
The flaw in your analysis of total cash is assuming that the RRSP withdrawals are spent and not reinvested. Melting down the RRSP does not require that the cash is spent. A more fair comparison of the meltdown is to assume the cash is not spent simply moved to non-registered investments. This would give more of a true tax savings.
Even better, move the cash into a TFSA
Hi Ken..one important piece of info regarding "how much money actually came in"...I believe your amounts are not the actual nominal dollars that would come in, but are in fact the inflation-adjusted dollars, and thus lower than the actual dollars you would see coming in.
Yeah, the real numbers would be higher. I believe I was talking about the after-tax money coming in which would be lower in the first example where they have higher income during the first stretch
@@K4Financial If I heard you correctly, starting ten minutes in, it's pre-tax over lifetime numbers you are presenting. Anyway just a comment, as when people hear they will be getting X dollars over their lifetime from source Y, they are usually thinking in nominal dollars, and the nominal dollars would be significantly higher.
Wish you would make a video, that is in my ballpark ...
Iam 63 have around 50k in rsp no savings... mortgage of 60k other deat of 50k ...
Want to retire next year?
Hey Ken. This is exactly my situation. Do you suggest that I change my RRSP to a RRIF for the meltdown? Thanks.
It doesn’t really matter.
A RRIF/RRIF growing in this investment climate? Wishful thinking. Mine’s getting hammered with so called ‘low risk’ investing. Thank God for my ‘gold plated’ pension.
The market fluctuates so the RRSP/RRIF balance doesn't decline linearly over time. Is it better to withdraw more during market highs and withdraw less during market corrections?
If you’re doing a meltdown in a short period of time, you should take market risk off the table if possible.
As to your second point, in a perfect world you would do this, but it’s not exactly simple to execute.
You should be able to keep your rrsp and not have to RIF it at 71.This way you get to chose the amount you want not being told what to withdraw whether you need it or not in any particular year. That seems more fair to me than the current system. Maybe you could talk about that.
@@jimjackson4256 I can. I’ve seen a few posts about this lately. Why is this a concern?
@@K4Financial Well because maybe some years i will have some big gains and will have a big tax bill just because of that. I won’t need money from a RIF that i can’t even chose the amount of and pay tax on that too !As you get older the mandated withdrawals from a RIF as a percentage become huge until in your 80s they become double digit percentages which will destroy your retirement fund in just a few years and i haven’t even mentioned a market meltdown which of course happens periodically.Imagine a meltdown happening and you have to withdraw money right at the bottom rather than being able wait until things recover. What a disaster in yet that is the law as it stands now.I have have to think any political party which proposes letting people withdraw funds as they see fit would get a lot of votes from seniors and there are a lot of seniors out there. Your fund is collapsed when you die and the govt takes their slice eventually anyway.I think that position is reasonable and fair.
What is the bridge component?
Great video! Still I have a few question about all your or Adam's scenarious: Why most of the time you are making these scenarious for people which have a defined pension or guaranteed pension? Most of the people have only CPP, RRSP amd some contribution plans from work. Also, everything is planned to use all RRSP before you die. What if you want to leave some money to your kids?
Two parts I guess. Meltdown strategies make more sense when trying to equal out the income over life as there are more moving parts when a pension is in play.
2nd, if that’s the case then we would develop the plan based on that goal.
With just an RRSP, CPP and OAS, if you wanted to leave money to your kids, then you’d likely just RRIF and take the pensions upon retirement. Not really much to it.
Do you have the software that calculates the best way to collect government pensions, RRSP meltdown if you have a defined benefit pension?
Yes
It might be closer to figure 4% inflation and 2% RRSP growth by what I’m seeing
Led Zepplins, Robert Plant sings, " have you seen the bridge?" I haven't seen the bridge. "where's the doggone bridge!"
Most private pension plans consist of a lifetime pension amount and a bridging amount. They both start on your retirement date. The lifetime amount is there for your lifetime but the bridge amount is only there until you reach 65 and get the CPP or QPP. If all your career employment was at the same employer then your bridging should be approximately the same amount as the “CPP or QPP” amount at 65. In other word, the bridging is only there to bridge you until 65 when it is replaced by the CPP or QPP.