How foreign withholding taxes affect returns + MORE Jul 29th

Retirement does not have to be an all-or-nothing proposition when it comes to drawing income versus earning more of it. This column advocates a couple of things: one, drawing gradually on more and more multiple streams of income; and two, continuing at least on a part-time basis the stream of income known as earned income.
Indeed, an analysis commissioned by Larry Berman, host of BNN’s Berman Call and Chief Investment Officer of ETF Capital Management, showed the powerful impact of earning just $1,000 in part-time income each month between the age of 65 and 75; or in the case of couples $2,000 a month between them.
The analysis prepared by ETF Capital’s Fabien Ouellette vividly shows that compared to earning nothing extra at all after the traditional retirement age of 65, earning such modest amounts of extra income (whether as a part-time employee or on a self-employed basis) magically accomplishes two things.
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TORONTO – When people picture retirement, they may envision lying on a sandy beach with a mojito in hand or teeing off on a breathtaking golf course in Hawaii.
What they usually don’t consider is the alternative: being broke and struggling to pay the bills.
So how do you ensure you have enough money saved for the retirement of your dreams when you don’t know how long you will live?
The wisest advice, according to financial experts, is to budget conservatively because it’s always better to have some money when you die than no money while you’re still alive.
“Most people are living longer than their parents and their grandparents did,” said John De Goey, a certified financial planner and portfolio manager at Industrial Alliance Securities.
“A good baseline is that you need to plan to live until age 90.”
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Should you work part-time in retirement?
There are several factors that could also affect a life expectancy, including whether there is a family history of health problems and one’s gender…

TORONTO — Ontario’s Liberal government spent $70 million to create a provincial pension plan that won’t be needed because Ottawa and the other provinces agreed to enhance the CPP.

The spending includes $3.7 million in compensation payments for employees at the corporation set up by the province to administer the Ontario Retirement Pension Plan, including more than $2 million to be split by its top six executives.

Ontario Premier Kathleen Wynne and Finance Minister Charles Sousa are shown in Toronto on Tuesday June 11, 2013. (Photo: Aaron Vincent Elkaim/CP)

Most of the ORPP executives were only hired in March or April, and one in June, but they will each be entitled to about $335,000 each in severance.

The New Democrats called the severance payments an “insult” to people who can’t afford to retire, especially when most people knew the provincial pension plan was unlikely to get off the ground.

“Premier Kathleen Wynne and her government failed to cap executive severances in anticipation of the foreseeable outcome that CPP enhancement would make the ORPP unnecessary,” said NDP pensions critic Jennifer French…

The Globe and MailOntario spent $70-million to create provincial pension planThe Globe and MailOntario spent $70 million preparing to create a provincial pension plan that won't be needed because Ottawa and the other provinces agreed to enhance the CPP. Finance Minister Charles Sousa says over $2 million will go for severance for the top six …Comment: The good, bad and ugly of an expanded CPPTimes Colonistall 16 news articles »

In our newly revised white paper, Justin Bender and I explain the hidden cost of foreign withholding taxes on U.S. and international equity ETFs. I gave an overview of the most important points in my previous blog post. Now let’s look at one of the more subtle ideas: how those taxes affect your personal rate of return.
Meet Julie, an investor who is looking to hold U.S. equities in both her RRSP and non-registered account. After reading our paper, Julie knows the U.S. imposes a 15% withholding tax on dividends paid to Canadians, and with U.S. stocks yielding 2% these days, that would result in a drag of about 0.30%. So she decides on the following:

In her RRSP, Julie uses the Vanguard Total Stock Market ETF (VTI), because this U.S.-listed fund is exempt from withholding taxes.
In her taxable account, Julie uses the Vanguard U.S. Total Market Index ETF (VUN), the Canadian-listed equivalent of VTI. This ETF is denominated in Canadian dollars, which makes it cheaper and easier to trade…