Single retirees face a significant tax disadvantage due to higher tax brackets, reduced standard deductions, and lack of joint filing benefits, resulting in a greater portion of their retirement income being subject to taxation.
That’s so true. My aunt is a single retiree and she’s always complaining about her tax bill. She’s worked hard her whole life, paid her taxes and now she’s being penalized for being single in retirement. It just doesn’t seem fair.
Exactly! My mom is a widow and she’s struggling to make ends meet because of the reduced benefits. She dedicated her life to raising our family and supporting my dad and now she’s facing financial insecurity in her golden years.
I’m so sorry to hear that. It’s unacceptable that widows like your mom face financial struggles after dedicating their lives to family. We need to advocate for better support systems
I agree. That’s why I recommend consulting a CFA with expertise in retirement planning and elder care finance so we don’t just leave our finances to luck or in the hands of the law makers who can change their minds at anytime.
With the amount of patients i am seeing who are younger, with palliative ailments that were not prevalent before...please, if u can, dont work so long that u cant enjoy yourself later. Prep now with ur finances
This whole income splitting thing that was introduced in 2007 created an unfairness in our tax system. The burden of taxation was shifted from couples to singles. With the rising cost of living, I think it's time that we eliminate income splitting and let everybody be taxed as individuals once again.
You got that right!! If it isn’t bad enough that you have lost a spouse early in retirement you get to pay more tax as everything gets consolidated to 1 income.
Hi Adam, can you do an informative video on dividend gross up? My $30k of dividend will climb to a taxable income of $41,500 because of the 38% gross up. With an RRSP melt down, DB pension, and OAS, the OAS will be partially clawed back. How to best handle that? TIA.
You mentioned the Basic Personal Amount. I'm assuming income splitting also effectively doubles the Age Amount. Could it also effectively double the Pension Income Deduction?
Not only do couples get double the age amount, income splitting means they’re less likely to hit a clawback of the age amount, or have less clawed back if they do slide over the threshold. And so, singles get hit even harder at tax time compared to the scenarios in the video.
@@user-bg9em7ch6k true, I get a tax deduction on my annual tax report every year having him as a dependent. I don't know if there would be a way to income-split on RRSP though
I am nearing retirement and plan on aggregating all of my liquid assists into several investment accounts (RRSP, TFSA, non-registered) at a single bank (BMO). Is it prudent to keep all my investments at one financial institution but within several accounts? As the accounts will hold mostly equities which do not have coverage of CDIC is this approach reasonable?
Hi Adam. Are you aware of a free software similar to yours that we can use online. I would like to run my numbers. If not, maybe you can do a video on showing us how to do a similar one in a spreadsheet!!!
I never dispute Adams math, he has it nailed, the only thing i disagree with is the RRSP meltdown. I have no intention of burning through my RRSPs over a period of 5 or 10 years . Why would I want more money from 70 to 85..slow go No go years. Ill take a smaller amount out of RRSP, a smaller amount of CPP and reduce my OAS clawback vs spending my money early. .take a bit out of each.
Of course do what you like but I'd say Adam's point is to take the money out of your RRSP before you hit 70 to get a lower tax rate on your on your withdrawals than if you were also collecting CPP & OAS. At age 70 start your CPP & OAS and reduce what you are taking out of your RRSP then. If you get enough out of your RRSP before age 70, you'll have more money to spend in the prime go-go years before age 70, and OAS claw back shouldn't be a big issue after age 70 as you begin to head into slow-go. As you age into no-go you'll have the maximum guaranteed indexed monthly cashflow from CPP & OAS that you won't have to manage into your 90s should you happen to live that long. Overall it seems like a decent RRSP withdrawal plan to me (single or not).
Another point I would make is meltdowns doesn't equate to burning through your RRSPs. To me it means having those funds deregistered so whatever isn't needed is available on a tax efficient or no tax basis in TFSA account or open investments where you are only paying taxes on the growth. Lots of flexibility to pull funds as needed then without worrying about tax consequences. I don't plan on waiting to 70 for CPP and OAS however do plan on waiting till I figure that our DB pensions CPP and OAS cover off all our annual expenses so RRIF funds will be nice to haves or vacations in warm climates. The overall plan will be to have all RRIF monies deregistered by age 78-80
@ParallelWealth that's my point..if I meltdown I'll have less or none by the time I hit the late 70s. If I meltdown now I'll burn through $25,000/ year for 10 years..adding 25 k to my Pension income that will put me over 105 k before taxes, then after 65 I'll add clawback OAS. I'd rather be taxed on $10,000 more than 25,000. . I'll be taking my CPP in 2 months at 61. That reduced RRSP withdrawal will last 25 years instead of 10 years.. if I wait until 70 to collect CPP I'll only get $7000 more per year being taxed on 15000 more than I need I need doesn't make sense to me.
I read this document from 2020 which provides an overview of what is happening in Canada to get another perspective. Same message. FINAL+-+NIA_Get+the+Most+from+the+Canada+&+Quebec+Pension+Plans+by+Delaying+Benefits.pdf.
On the plus side, everything you earn as a single person is yours to spend as you wish.
Wow.. impressive thought
@@rob2039lol
Single retirees face a significant tax disadvantage due to higher tax brackets, reduced standard deductions, and lack of joint filing benefits, resulting in a greater portion of their retirement income being subject to taxation.
That’s so true. My aunt is a single retiree and she’s always complaining about her tax bill. She’s worked hard her whole life, paid her taxes and now she’s being penalized for being single in retirement. It just doesn’t seem fair.
And it’s not just the tax brackets. They also miss out on spousal benefits like survivor benefits, which can be a significant loss.
Exactly! My mom is a widow and she’s struggling to make ends meet because of the reduced benefits. She dedicated her life to raising our family and supporting my dad and now she’s facing financial insecurity in her golden years.
I’m so sorry to hear that. It’s unacceptable that widows like your mom face financial struggles after dedicating their lives to family. We need to advocate for better support systems
I agree. That’s why I recommend consulting a CFA with expertise in retirement planning and elder care finance so we don’t just leave our finances to luck or in the hands of the law makers who can change their minds at anytime.
The government really needs to make some changes for single people.
With the amount of patients i am seeing who are younger, with palliative ailments that were not prevalent before...please, if u can, dont work so long that u cant enjoy yourself later. Prep now with ur finances
I am appreciative of this video and attention to single persons. Your videos are informative, helpful and important. Thank you for your great work
Glad it was helpful!
Thx for this!,
So well articulated! Out of the park Adam. This will help so many people.
those spreadsheets are too 'dense'. too much information, small font, all that greyed out space...I zone out a bit.
I agree. Can't see the numbers when viewing the video. Have to go by the vocal and summaries which are larger font
There are no tax advantages for singles period. Couples can delay CPP and OAS etc. just as well as singles.
That's something that should be changed.
This whole income splitting thing that was introduced in 2007 created an unfairness in our tax system. The burden of taxation was shifted from couples to singles. With the rising cost of living, I think it's time that we eliminate income splitting and let everybody be taxed as individuals once again.
And then reduce overall taxes, perhaps by increasing the basic amount.
@@K.M.2324 good luck. It’s been this way for years.
@@greatrabbit will not solve the problem. The base amount applies to all. The issue is the discriminatory tax regime disadvantaging singles.
Great video. Thanks you! Given that singles need less income than a couple, I would be interested in more of an apples to apples tax comparison.
Note that non registered income is not eligible to split. Ex: income or gain from non registered investment account cannot be splitted.
'Your money' is not all your money if its registered , so spend that first ... Im recently a single retiree and im watching this video a few times ...
You got that right!! If it isn’t bad enough that you have lost a spouse early in retirement you get to pay more tax as everything gets consolidated to 1 income.
Another GREAT easy to understand helpful /practical/ realistic video -> thank you so much!
You're very welcome!
Hi Adam, can you do an informative video on dividend gross up? My $30k of dividend will climb to a taxable income of $41,500 because of the 38% gross up. With an RRSP melt down, DB pension, and OAS, the OAS will be partially clawed back.
How to best handle that?
TIA.
That example at 14:23 about RRSP meltdown versus not doing it, the estate after tax amount is only a difference of $1,200. That's nothing.
So you would rather give the government the extra $1200?
1200 per year x 20 years $24,000 add up over time
You mentioned the Basic Personal Amount. I'm assuming income splitting also effectively doubles the Age Amount. Could it also effectively double the Pension Income Deduction?
Not only do couples get double the age amount, income splitting means they’re less likely to hit a clawback of the age amount, or have less clawed back if they do slide over the threshold. And so, singles get hit even harder at tax time compared to the scenarios in the video.
What if you are single but you are a caretaker? Parent/disable child?
Doesn’t matter. They are not a spouse.
@@murraytown4 In the US, if you’re paying more than half of their expenses, you can take them as a dependent. Idk if that’s true in Canada though (?)
@@user-bg9em7ch6k true, I get a tax deduction on my annual tax report every year having him as a dependent. I don't know if there would be a way to income-split on RRSP though
I am nearing retirement and plan on aggregating all of my liquid assists into several investment accounts (RRSP, TFSA, non-registered) at a single bank (BMO). Is it prudent to keep all my investments at one financial institution but within several accounts? As the accounts will hold mostly equities which do not have coverage of CDIC is this approach reasonable?
How can we push for a new law? That all retirees should be tax-exempt. They already paid their dues while working!!!
For a single you lose everything you put into CPP if you die early.
How does CPP2 work the software moving forward.
What about if u have mpp
Hi Adam. Are you aware of a free software similar to yours that we can use online. I would like to run my numbers. If not, maybe you can do a video on showing us how to do a similar one in a spreadsheet!!!
I recently used Adviice (with two "I"). I paid their monthly rate of 9-10 dollars, ran the numbers and closed the account. Lots of data entry...
Nothing free out there that is decent unfortunately.
@@ParallelWealth Thanks Adam for replying
Does income splitting only apply to retirement income? Or can we income split when one or both us us is still working?
Certain retirement income sources at certain ages. Can't split employment income.
There used to be income splitting for working couples, but the liberals canceled that in the 2016 budget.
Any taxes or witholdings if we put US stocks in a TFSA?
Yes, the USA doesn't recognize the TFSA as a tax haven account like the RRSP, so you'll have withholding tax 15%.
@@CalmPlains 15% Only on the dividends paid. On capital gain stock there is no withholding tax.
I never dispute Adams math, he has it nailed, the only thing i disagree with is the RRSP meltdown. I have no intention of burning through my RRSPs over a period of 5 or 10 years . Why would I want more money from 70 to 85..slow go No go years. Ill take a smaller amount out of RRSP, a smaller amount of CPP and reduce my OAS clawback vs spending my money early. .take a bit out of each.
You don't have more later with the meltdown - you get more earlier and while paying less tax.
Of course do what you like but I'd say Adam's point is to take the money out of your RRSP before you hit 70 to get a lower tax rate on your on your withdrawals than if you were also collecting CPP & OAS. At age 70 start your CPP & OAS and reduce what you are taking out of your RRSP then. If you get enough out of your RRSP before age 70, you'll have more money to spend in the prime go-go years before age 70, and OAS claw back shouldn't be a big issue after age 70 as you begin to head into slow-go. As you age into no-go you'll have the maximum guaranteed indexed monthly cashflow from CPP & OAS that you won't have to manage into your 90s should you happen to live that long. Overall it seems like a decent RRSP withdrawal plan to me (single or not).
Another point I would make is meltdowns doesn't equate to burning through your RRSPs. To me it means having those funds deregistered so whatever isn't needed is available on a tax efficient or no tax basis in TFSA account or open investments where you are only paying taxes on the growth. Lots of flexibility to pull funds as needed then without worrying about tax consequences.
I don't plan on waiting to 70 for CPP and OAS however do plan on waiting till I figure that our DB pensions CPP and OAS cover off all our annual expenses so RRIF funds will be nice to haves or vacations in warm climates. The overall plan will be to have all RRIF monies deregistered by age 78-80
@ParallelWealth that's my point..if I meltdown I'll have less or none by the time I hit the late 70s. If I meltdown now I'll burn through $25,000/ year for 10 years..adding 25 k to my Pension income that will put me over 105 k before taxes, then after 65 I'll add clawback OAS. I'd rather be taxed on $10,000 more than 25,000. . I'll be taking my CPP in 2 months at 61. That reduced RRSP withdrawal will last 25 years instead of 10 years.. if I wait until 70 to collect CPP I'll only get $7000 more per year being taxed on 15000 more than I need I need doesn't make sense to me.
@DoneByD yes I get that but when you take money out of an RRSP it is taxed at that point., 30% above 15000..even if you put it in a TFSA you lost 30%.
Marry a philipina and leave her half your pension .
I read this document from 2020 which provides an overview of what is happening in Canada to get another perspective. Same message. FINAL+-+NIA_Get+the+Most+from+the+Canada+&+Quebec+Pension+Plans+by+Delaying+Benefits.pdf.