3 Reasons You Need to Aggressively Withdraw Your RRSPs
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- čas přidán 20. 07. 2024
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In this video, Marc Sabourin from Trans Canada Wealth Management discusses three reasons why you should consider aggressively drawing down your RRSPs in retirement.
1. The first reason is the RRSP tax bomb, where if you pass away with a large RRSP balance, your beneficiaries may end up paying a hefty tax bill. By drawing down your RRSPs earlier, you can avoid this issue.
2. The second reason is the OAS clawback, which can be avoided by making withdrawals earlier and reducing your RRIF balance.
3. Finally, Marc discusses how personal care home costs in Manitoba are based on your income, and drawing down your RRSPs can help keep your income lower to pay less for care. Don't miss out on this informative video - hit the subscribe button and join us for the next episode!
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Reach Marc Sabourin via email at msabourin@harbourfrontwealth.com or by phone at 204-256-5555.
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Disclaimer
The information contained in this video message is believed to be reliable, but the accuracy and completeness of the information are not guaranteed. Harbourfront Wealth Management Inc. has no liability to viewers of this message, and its use is entirely at the risk of the viewer. Harbourfront Wealth Management Inc. does not assume any errors that may occur in this message. Please consult your Harbourfront Wealth Management Inc. advisor before investing.
The problem with drawing down from RRSP to decrease your income before going to a care home is that no one can really predict when that day may happen.......
The drawdown doesn't mean you don't have the money any longer - its just removed systematically over a number of years so you don't get a larger tax hit... You can save the money in your TFSA assuming you don't need all funds or even an unregistered investment (however doing this has other potential tax consequences moving forward).
Or if you are in a low tax bracket but not at the top of the income in that bracket it just make sense to pull some money out to take you to the top of the bracket.
Another reason, if you don't have other income eligible for the pension credit then you might as well remove some RRIF money that allows you to claim that tax credit for the year....
A carefull study needs to be done before you take money out of a RRIF that continues to grow tax free and to put it anywhere other than in a TFSA that is only a small amount. Now the rest of your money will be earning money that is taxable or subject to capital gains tax at some point. This can also put you in a higher tax bracket and reduce you OAS. JMHO
Thanks for the advice, my wife has an RRSP, we are planning to push the collection of her CPP and OAS to age 70, trying to draw that RRSP down by at least 1/3 over the next 6 years.
Sounds great!
Pushing CPP and OAS out to 70 is a great idea - unless you have known life-threatening condition or you need the funds to afford your lifestyle. Drawing down her RRSP beyond what you need to live the lifestyle you want and to maximize your TFSA contributions is foolish. People who make these youtube videos either don't want to tell their clients the truth or are unfamiliar with a financial calculator. The goal should never be to pay less tax if it means having less for yourself or your estate. All the tax credits people get over the time they're building their RRSP are effectively a series of indefinite interest-free loans.
The one comment you made about staying in the same tax bracket is true, however for each dollar in that bracket, you pay more taxes. Tax brackets are laddered. Ie if you are in the 32% bracket and you have only $1000 above that limit you only pay that 32% on the extra thousand. If you have $5000 over you pay 32% on the 5000
Appreciate the feedback!
You comment is true however average tax will be considerably lower than the marginal tax you pay on the funds in the 32% bracket and if you contributed to RRSP while in the 32% bracket you go the tax credit at the marginal rate going in but only have to pay actual tax at the average rate coming out.
No mention on GIS for low income pensioner?
Good advice ✅
Thanks for watching!
The posting looks better if you spell "draw down" correctly in the title picture. You spell it correctly later. And some of the captions during the lecture are spelled wrong too.
I'm taking the maximum amount that after splitting with my wife keeps both of us in the lowest tax bracket. I'm taking it out aggressively in case one of us dies and the other is left with having to take a longer period to get it out at the lowest bracket. Don't have TSFA room bit it is what it is.
How do you aggressively draw down your rrsp ?
I incorporated to avoid the rrsp scam.
So when withdrawing from rrsp, I assume it would be best to contribute that money to TFSA? This is assuming your have room in your TFSA (or in your spouse's TFSA account). Thanks!
Yes of course. Because then you can avoid the other bugaboo tax...capital gains tax.
I think #2 is not worth thinking about. If you make enough not to worry about it, don't worry about it.
Too bad you need to rif your rrsp instead of letting people withdraw money as they need it instead being told how much to withdraw.
1) In the beginning, you never once said that all $ contributed to an RRSP was tax deducible. 2) Ever try to get into a Gov’t care facility ? Good luck ! 3) Private care costa a minimum of $8K a month. Should U live to 90+ years, U better have a $1MM in Ur RRSP \ RRIF…..