@davidmcnamara8024 That's a great strategy! Splitting your RRSP into a RRIF at 60 while continuing to contribute to your RRSP allows you to start drawing income while still benefiting from tax deductions on new contributions. Starting a RRIF early can also provide a steady income stream and potentially allow for pension income splitting if you have a spouse. It's an excellent example of how flexibility in retirement planning can optimize your financial situation.
Thank you for the information. One topic that never gets discussed in any video related to RRSP to RRIF conversion from my searches on RUclips, an idea for a future video and possibly you could explain this. Assume you have seven stocks in your RRIF that pay dividends with a yearly yield of 20K and you have requested the institution pay a monthly amount of $2K per month = 24K per year. Where does the additional 4K per year come from, who decides which stocks need to be sold to fund the additional 4K? Is the expectation that the individual has to track this and sell a certain stock to make up for the shortfall or does the institution decide on behalf of the individual which stocks get sold? Also, im not sure you are aware but your web-site under "fees" a message comes up with "page not found"??
Yes. You have to decide and IN ADVANCE of the payout dates or it throws the cash balance negative and you will be charged fees to fix it after the fact.
Is there any reason NOT to convert before 71? The only reason I can see is that you can no longer make a contribution into it for a tax deduction and you must take money out...but are you not supposed to spend your savings in retirement??
That’s the trick the banks want you to believe, that the ‘time to convert your RRSP to RRIF is usually 71’. That is the wrong advice, because what you are going to see and enjoy after you are 71? Unless you live a healthy and long life. Convert it when you feel like it and enjoy the fruits of your hardworking the younger the better, don’t listen to these big banks puppets who don’t work on your interests!
@garth217 You’ve raised some good points about converting before 71. Here are a few additional considerations: Loss of Contribution Room: As you mentioned, once you convert, you can no longer make contributions and benefit from the tax deduction. This can be significant if you're still working and want to reduce your taxable income. Mandatory Withdrawals: With conversion, you must start taking minimum withdrawals, which are subject to tax. If you don't need the income yet, this could lead to paying taxes on money you would otherwise leave invested. Investment Growth: Keeping funds in a tax-sheltered plan longer allows for potentially more growth without immediate tax implications. Converting early could mean missing out on years of tax-deferred growth. Pension Income Splitting: If you have a spouse, converting at 65 can allow for pension income splitting, potentially reducing your overall tax burden. Health and Longevity: Consider your health and life expectancy. If you expect a longer retirement, keeping funds in a tax-sheltered account might provide more financial security in the later years. Ultimately, the decision to convert before 71 depends on your specific financial situation, tax considerations, and retirement goals. Consulting with a financial advisor can help tailor the best strategy for your needs.
@precedenceprivatewealth2872 . Thanks for the reply. Mandatory withdrawals are age dependent. So if I use my wife's age it's currently about 2.86%. That's not much. If I wait later the amount increases and so would tge tax implications. Investment growth..doesn't the funds continue to grow?? ..yes it will decrease in a RIFF once you start spending it. I have been pension splitting since I retired at 54. Yes I'm aware of the tax break of $2000 if you have pension income.. I'm concerned about keeping my money in the RRSP until 71 as the percentage increases. With more withdrawn there is potential for more taxes??? FYI I have a Defined Benefit Pension and bridge until 65. Yes I'm one of the lucky ones. I'm thinking that I'm going to have to make withdrawals soon in smaller amounts otherwise I'll be paying more taxes once I hit 70
@neilbertram1922 Absolutely, you can start a RRIF at any age! It's a flexible option for managing retirement income. Thanks for pointing that out! #RRIF #RetirementPlanning #FinancialFlexibility #InvestmentStrategy
CRA doesn't understand fair. If they did there would be an inflation adjustment on capital gains taxes. When the feds are running huge deficit budgets and debt it is about grabbing every dollar they can find. Frankly the entire tax legislation needs to be rewritten.
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Thank you for the clear and concise explanation. I look forward to more videos!
I split 1/2 my RRSP into a RRIF at age 60. You can do it as early as 55. I still contribute to my RRSP as I still work.
@davidmcnamara8024
That's a great strategy! Splitting your RRSP into a RRIF at 60 while continuing to contribute to your RRSP allows you to start drawing income while still benefiting from tax deductions on new contributions. Starting a RRIF early can also provide a steady income stream and potentially allow for pension income splitting if you have a spouse. It's an excellent example of how flexibility in retirement planning can optimize your financial situation.
@@precedenceprivatewealth2872 um...yeah... I know that. Tell me something I don't.
Thank you for the information. One topic that never gets discussed in any video related to RRSP to RRIF conversion from my searches on RUclips, an idea for a future video and possibly you could explain this. Assume you have seven stocks in your RRIF that pay dividends with a yearly yield of 20K and you have requested the institution pay a monthly amount of $2K per month = 24K per year. Where does the additional 4K per year come from, who decides which stocks need to be sold to fund the additional 4K? Is the expectation that the individual has to track this and sell a certain stock to make up for the shortfall or does the institution decide on behalf of the individual which stocks get sold? Also, im not sure you are aware but your web-site under "fees" a message comes up with "page not found"??
Yes. You have to decide and IN ADVANCE of the payout dates or it throws the cash balance negative and you will be charged fees to fix it after the fact.
Is there any reason NOT to convert before 71? The only reason I can see is that you can no longer make a contribution into it for a tax deduction and you must take money out...but are you not supposed to spend your savings in retirement??
That’s the trick the banks want you to believe, that the ‘time to convert your RRSP to RRIF is usually 71’. That is the wrong advice, because what you are going to see and enjoy after you are 71? Unless you live a healthy and long life. Convert it when you feel like it and enjoy the fruits of your hardworking the younger the better, don’t listen to these big banks puppets who don’t work on your interests!
@garth217
You’ve raised some good points about converting before 71. Here are a few additional considerations:
Loss of Contribution Room: As you mentioned, once you convert, you can no longer make contributions and benefit from the tax deduction. This can be significant if you're still working and want to reduce your taxable income.
Mandatory Withdrawals: With conversion, you must start taking minimum withdrawals, which are subject to tax. If you don't need the income yet, this could lead to paying taxes on money you would otherwise leave invested.
Investment Growth: Keeping funds in a tax-sheltered plan longer allows for potentially more growth without immediate tax implications. Converting early could mean missing out on years of tax-deferred growth.
Pension Income Splitting: If you have a spouse, converting at 65 can allow for pension income splitting, potentially reducing your overall tax burden.
Health and Longevity: Consider your health and life expectancy. If you expect a longer retirement, keeping funds in a tax-sheltered account might provide more financial security in the later years.
Ultimately, the decision to convert before 71 depends on your specific financial situation, tax considerations, and retirement goals. Consulting with a financial advisor can help tailor the best strategy for your needs.
@precedenceprivatewealth2872 .
Thanks for the reply.
Mandatory withdrawals are age dependent. So if I use my wife's age it's currently about 2.86%. That's not much. If I wait later the amount increases and so would tge tax implications.
Investment growth..doesn't the funds continue to grow?? ..yes it will decrease in a RIFF once you start spending it.
I have been pension splitting since I retired at 54. Yes I'm aware of the tax break of $2000 if you have pension income..
I'm concerned about keeping my money in the RRSP until 71 as the percentage increases. With more withdrawn there is potential for more taxes???
FYI I have a Defined Benefit Pension and bridge until 65. Yes I'm one of the lucky ones.
I'm thinking that I'm going to have to make withdrawals soon in smaller amounts otherwise I'll be paying more taxes once I hit 70
FYI ... you can start a RRIF at any age. You don't have to wait to 55
@neilbertram1922
Absolutely, you can start a RRIF at any age! It's a flexible option for managing retirement income. Thanks for pointing that out!
#RRIF #RetirementPlanning #FinancialFlexibility #InvestmentStrategy
They should let us keep the rrsp then we could take money out as needed not as mandated. That seems fair.
CRA doesn't understand fair. If they did there would be an inflation adjustment on capital gains taxes. When the feds are running huge deficit budgets and debt it is about grabbing every dollar they can find. Frankly the entire tax legislation needs to be rewritten.