Should I draw down my RRIF to avoid estate taxes? + MORE Apr 25th
Stock news for investors: Fourth-quarter earnings roll in from Canada’s big banks Dec 6th
Stock news for investors: Canadian Natural boosts quarterly dividend after massive Q4 profit Mar 7th
Financial paralysis and how to get moving again + MORE Feb 28th
I will be receiving CPP and OAS as of June 2024. I intend on working one more year until I reach 66. My question is: Should I put all my CPP money into an RRSP to shelter it from tax? Or should I pay the tax on it and invest in a tax-free savings account?
–Gary
Where to put retirement income: RRSP or TFSA
Gary, believe it or not, it doesn’t matter if you contribute to a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). You get the same (after-tax) results. Well, almost.
But, before we go there, are you aware that you don’t have to start your Canada Pension Plan (CPP) benefits and Old Age Security (OAS) at age 65? Let’s do a quick recap on delaying CPP and OAS, and then tackle your RRSP versus TFSA question.
Should you delay CPP and OAS to after 65?
CPP benefits increase by 0.7% for every month delayed past your 65th birthday, working out to an annual increase of 8.4%. Plus, the CPP benefit is based on the average yearly maximum pension earnings (AYMPE)—the maximum salary amount on which you need to contribute to the CPP—over the last five years…
