Tag Archives: RRIFs

Climb into a higher tax bracket — and save money

Posted By |

MoneySense.ca has just published the second instalment of my new Retired Money columns. Click on the highlighted headline for the full piece: Climb into a higher tax bracket — and save money.

Yes, the concept may seem at first blush a bit contradictory but strange things can happen when you’re in the netherworld between full-time employment and full-stop retirement.

A period of semi-retirement (or what we call Victory Lap Retirement in an upcoming book I’ve written with Mike Drak) brings with it various opportunities to pay a little more tax than necessary while you’re “basking” in a relatively low tax bracket, in order to pay a lot less tax once those large RRSPs grow into even larger RRIFs and their forced annual (and taxable) withdrawals once you reach age 71.

dougdahmer
Emeritus Financial Strategy’s Doug Dahmer

One of the sources for the piece is Emeritus Financial Strategies’ Doug Dahmer, a Hub contributor who has penned many blogs on this theme, most of them housed in the Decumulate & Downsize section. Doug is pictured to the right.

Check out some of his earlier Hub guest blogs:

Debt is more than a four-letter word during your drawdown years. 

Timing of CPP Benefits: Get both a bird in the hand and two in the bush. 

A Rare Breed of Financial Planner. 

Withdrawing from your Retirement Nest Egg

Posted By |
MarieEngen
Marie Engen, Boomer & Echo

By Marie Engen, Boomer & Echo

Special to the Financial Independence Hub

You’ve been saving all your working life and now that you have entered your retirement phase, it’s time to start drawing from your savings. In some circumstances there will be people who will be able to live off their dividends and interest alone. Most retirees, however, will have to start spending the money they have saved.

Once you have decided on the amount of income you need annually for your retirement lifestyle and determined how much of it will come from your guaranteed pensions, the remainder must be withdrawn from your nest egg.

You may have multiple accounts and both registered and unregistered savings. Your investments could be stocks and bonds, ETFs and/or mutual funds. You might be in a position where you must withdraw a minimum amount from your RRIFs.

This example will show you how you can manage your retirement withdrawals, taking the total of all your accounts as a whole. It assumes dividends and interest will be reinvested, but you can use them as part of your yearly cash allotment if you so choose. You just have to adjust as necessary.

A model for retirement withdrawals

Meet newly retired Rodney and Pamela O’Brien. They have a retirement nest egg totalling $500,000. Continue Reading…

Federal Budget 2016: don’t expect much relief for personal finances or retirement

Posted By |
image
Federal finance minister Bill Morneau selects Canadian-designed shoes for upcoming federal budget

Here’s my latest column in the Financial Post, which provides a look ahead to the federal budget, which will go live at 4 pm Tuesday afternoon.

You can find the column here by clicking on this headline: Why Tuesday’s budget may not hold much good news for your personal finances. It’s also in the print edition of today’s paper.

Here is info on the media lockup, which starts at 9:30 am.

Once the floodgates open on or shortly after 4 pm Tuesday, you should be able to get access to the budget by clicking on the Department of Finance website here. We will update this site as necessary and also watch my Twitter feed @JonChevreau, as we disseminate coverage once available. This feed also shows up on the right side of the Hub’s main page.

Can RRSPs ever get too large?

Posted By |

Canadian Registered Retirement Savings Plan concept word cloudCan a Registered Retirement Savings Plan (RRSP) ever get too large? From time to time, you’ll hear certain financial advisors say so and propose “melting down” RRSPs in a tax-effective manner.

The Financial Post just ran a piece by me on this topic, entitled The Pros and Perils of making early withdrawals from your RRSP. One of the sources cited is a familiar one to Hub readers: Doug Dahmer of Emeritus Financial Strategies often writes guest blogs in the Hub’s Decumulation section.

RRSP primer for millennials

Continue Reading…

Investor Toolkit: The right way to calculate your retirement income

Posted By |
1
Patrick McKeough, TSInetwork.ca

By Patrick McKeough, TSInetwork.ca

Special to the Financial Independence Hub

Tip of the week: “When you work out a plan for your retirement, make sure that you aren’t basing your future income on over-optimistic calculations that will end up leaving you short.”

Every year as RRSP season heats up, many investors are confident they are taking concrete steps toward a secure retirement. But are those steps based on realistic calculations?

Let’s say you’re 50 and you want to retire at 65. You have $200,000 in your RRSP, and you expect to add $15,000 in each of the next 15 years. To determine if this is enough to retire on, you need to make assumptions about investment returns and income needs.

• What you can expect

Long-term studies show that the stock market as a whole generally produces total pre-tax annual returns of 8% to 10%, or around 6% after inflation. For purposes of this retirement plan, we’ll assume a 6% yearly return, and disregard inflation. Continue Reading…