Retirement planning getting you down? There are always smart ways to plan the financial aspects of your retirement.
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Do you need a planner if you’re a DIY investor? May 23rd
In today’s digital age, there’s an increasing number of Canadians who choose do-it-yourself investing. Online brokerages and low-cost trading platforms allowed for a new style of investing to emerge: a new generation of DIYers. We’ve seen a shift in the financial planning industry. Well, self-.... More »
Kenney's 'fair deal' plan 'would completely change Alberta' if successful: political scientist - CTV News Nov 11th
Kenney's 'fair deal' plan 'would completely change Alberta' if successful: political scientist CTV News‘We need to unify Canada’: MPs explain lack of ‘appetite’ for Wexit in B.C. Global NewsA ‘fair deal’ for Alberta may come at a hefty cost for taxpayers, political .... More »
How to maximize your last-minute RRSP contribution + MORE Jan 26th
Mark your calendars: the deadline for Registered Retirement Savings Plan (RRSP) contributions for the 2020 tax year is March 1, 2021. But before you rush to deposit your money in a GIC or high-interest RRSP savings account at a local bank and call it a win, you should know there are other options th.... More »
What do to with a spousal RRSP at age 71 Jun 15th
Ask MoneySense
My question is in regards to a spousal RRSP that I have set up for my wife years ago. When she turns 71, do we have to turn it into something like a RRIF, which I did for my RRSP (I am older than her) and then withdraw from it annually? Or, could it be directly transferred to her TFSA.... More »
Should retirees speculate? + MORE Nov 16th
All investors need to know the difference between investing and speculation—often summed up as what you do with “serious money” versus “fun money”—and that’s doubly true for those at or near retirement. While investing is about building wealth you can count on, speculating typically me.... More »
Can I reclaim the withholding tax on my U.S. stocks?
– moneysense.ca
Q. I own U.S. stocks and Canadian stocks in my RRSP and RESP accounts for my kids. I do all the investing myself. I get annual performance statements from the bank that holds my RRSP online account and it shows about $200 in withholding tax. What is this? How can I claim it when I file taxes, and how can I get it back? I heard there was a form called W8 that can help. Is this accurate?
Thanks, Malay
Hi Malay. RRSPs are exempt from U.S. withholding taxes but RESPs and TFSAs are not. This is because the U.S. does not recognize them as tax-deferred registered accounts. Therefore, foreign taxes paid withheld in an RESP or TFSA cannot be recovered.
If these withholdings were in non-registered accounts, you could reduce your taxes on the foreign income paid to Canada by filing for a foreign tax credit using Schedule 1. This ensures that you don’t pay tax on the same income in both Canada and the foreign jurisdiction. That option, however, is not available when the foreign income is within a registered account for the reasons mentioned above…
How to avoid outliving your money
– moneysense.ca
(Shutterstock)“Retirees don’t want to think about later life planning. It is daunting, confusing, complex, and expensive. LIFE would offer a simple, understandable, equitable solution. Administered as a national program, it would be widely accessible. It would give retirees freedom of choice, help overcome behavioural biases, and encourage proactive preparation for advanced age…”
Bonnie-Jeanne MacDonald, PhD, FSA
National Institute on Ageing, Ryerson University
The quote comes from a recent study titled “Headed for the Poorhouse: How to Ensure Seniors Don’t Run Out of Cash before They Run Out of Time” published by the C. D. Howe Institute. Author Bonnie-Jeanne MacDonald makes a strong case for a national LIFE solution (Living Income for the Elderly) to avert this problem. Why is an ‘income-for-life’ solution needed? Because with advancing old age, running out of money becomes the major preoccupation for many middle-income seniors not lucky enough to be members of a defined benefit (DB) workplace pension plan…
RRSP top-ups in retirement could cost you
– moneysense.ca
Q: I retired in May 2009 and was under the impression that I could no longer contribute to an RRSP. I just found out I could, and my 2016 notice of assessment shows I have available contribution room for 2017 of $25,749. Also, my RRSP/PRPP deduction limit for 2017 is $25,749. My pension income for 2017 is roughly $50,000. I split with my wife $20,000 of that total. My question is can I purchase and claim RRSPs to the maximum amount
—Tom
A: Most people don’t envision contributing to their Registered Retirement Savings Plan (RRSP) in retirement, Tom. But usually that’s because most retirees don’t have money sitting around that could be used and are instead drawing down their RRSPs. It doesn’t mean you can’t contribute though.
First, I’d like to help you decipher your notice of assessment. Canada Revenue Agency (CRA) does a horrible job, in my opinion, of explaining RRSPs on an annual tax assessment. I find lots of people get confused and some even end up putting too much into their RRSPs because the CRA’s info is so unclear…
What’s the right retirement asset mix if you have a DB pension?
– moneysense.ca
(Shutterstock)Q: When calculating your asset mix can you include a pension as part of your bond/cash holdings in a portfolio with a 60% equity, 20% bond and 20% cash mix? If you had a pension that was paying $50,000 a year this would be equal to a million dollar GIC at 5%.
—B. McLeod
A: Hi B. McLeod. Thanks for the question.
To begin, I am going to operate under the assumption that you have a defined benefit pension which guarantees you $50,000 per year.
If you are trying to determine the risk portfolio of your cumulative holdings then I would suggest that yes, it would be appropriate to put your Defined Benefit pension plan into a risk category that has the same risk profile as a highly rated corporate or government bond.
Continuing under the assumption that you have a defined benefit pension plan that will pay you $50,000 per year until you pass away I would say that your pension plan is more similar to a life annuity rather than a GIC since a GIC comes to term whereas an annuity pays until death, but if you are trying to put a value on the holding of your pension plan I would say that yes, it is fair to count it as a million dollar GIC at 5%…
