RRSP season is here! What should you do?

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RRSP season is here! What should you do?

Post by LemonPeeler » Sat Jan 27, 2018 12:32 pm

I just read these today: The five biggest RRSP myths that Canadians can't stop repeating
http://business.financialpost.com/perso ... -repeating

Almost 40% of Canadians see ‘no point’ in investing in RRSPs: poll — here’s why they're wrong http://business.financialpost.com/perso ... y-suggests

The articles are finely written, then in many ways failed to inform.
Here are some things you might want to consider yourself as they are seldom discussed or even mentioned anywhere. Whether on purpose or not ;)
1. Some people will never be in a lower taxable bracket, even in retirement, especially in retirement because OAS & CPP will kick in on top of everything when turning 65. After years of working, saving and investment, if one has ½ million RRSP and ¼ million TFSA and some other cash, you will likely never be in a lower tax bracket.
2. The experts never talk about one thing. That is - timing is so key so that RRSP may not have anything to do with retirement or age. You could contribute in December when you know that you will have a high income this year and take out some next year because you know that you will have a lower income. How could you possibly know?

• If you get laid off in November
• you plan to take a year to travel
• You are having a baby and will be temporarily out of the work force
• You are going back to school for 1 year or 2
and many other life scenarios…

The focus should be both on contribution and withdrawals. If used wisely an RRSP is a great friend of yours throughout your entire working or non-working years. When consider if having an RRSP or how much to contribute, keep one thing in mind, it is your life and no experts can tell you how you should live it.

Live for today and plan for tomorrow


Re: RRSP season is here! What should you do?

Post by RRSP_Saver » Wed Jan 31, 2018 10:28 am

Your article is very interesting, but here are some of my thoughts:

0. It's possible that some of the 40% are also right: I think (some) low income people will neither have the money to save in an RRSP nor any benefit from it if they did.

1. I think you're mostly right about this, if by "lower taxable bracket" you mean "low..." (rather than lower then pre-retirement) and/or maybe for people that save a lot. It may also be worth mentioning that there is a "clawback provision" that will reduce OAS of high income earners; see some information here: https://retirehappy.ca/the-differences- ... p-and-oas/

2. I think most people see RRSPs as ONLY long-term-retirement-planning and don't realize that sometimes it can be used early. However one must think of the long-term consequences of these "early tricks" and only partake if confident they can live with it.

Cash Flow

Knowing when to start taking your CPP

Post by Cash Flow » Mon Jun 25, 2018 12:46 pm

To use in conjunction with RRSP, knowing when to start taking your CPP requires careful thought.
The pros and cons to both taking it early or late depend on many factors such as

your age
Will you have other income? Any Work Income, Investment Income, Rental income...
What happens if you become divorced or widowed because life events happen...

Always calculate your asset together with cask flow. It is cash flow not asset that supports your life style. Hopefully your asset will always generate cash flow. But markets are unpredictable. At least make sure adjusting your lifestyle is always within your control.

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