Can I withdraw from RRSPs to pay bills? + MORE Apr 20th

There are plenty of retirement plan options in Canada! Stay on top of the best plans right here.
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Do bonds still make sense for retirement savings? + MORE Apr 27th

Now that it’s clear interest rates bottomed some time ago and are well on an upwards trajectory, we’re seeing headlines declaring the “death of bonds.” Notable was the Globe & Mail article by veteran columnist and author Gordon Pape, announcing he was “getting out of bonds.” W.... More »
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How does an executor pay estate expenses during the probate process? + MORE May 4th

I’ve realized that my large RRSP would generate a very large income tax bill if I die in the near future. I don’t have a spouse, or anyone who qualifies as a beneficiary to my RRSP on a tax-deferred basis. How can my executor pay my income taxes if it takes a year to get probated?—Carol  .... More »
Million Dollar Journey editor and Canadian Financial Summit founder Kyle Prevost shares financial headlines and offers context for Canadian investors.

If a TFSA and an RRSP had a child: The new FHSA

As part of the 2022 budget, the government unveiled its new tax-free first home savings account (FFHSA, but I prefer FHSA as it’s less of a mouthful). And it will be a great way for first-time homebuyers to save up part of their down payment. In a nutshell, here’s what to know about the FHSA:

It allows Canadians to save and invest $8,000 per year, up to a lifetime maximum of $40,000.If you miss contributing in a year, you can’t “make up for it” by carrying forward contribution room in the years to come like you could with a tax-free savings account (TFSA) or a registered retirement savings plan (RRSP).It blends the tax refund benefits that we love with the RRSP, along with the no-strings-attached non-taxation of withdrawals that the TFSA is famous for.Investment income from interest, dividends or capital gains are yours to keep tax-free…

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What are the cons to withdrawing RRSP savings of $25,000 to pay off some unexpected bills I have incurred?—Anonymous

Withdrawing RRSPs when you’re not retired

Ahh, the unexpected bills.

Anonymous, I’ll give you my initial thoughts first, and then I’ll review the cons of withdrawing from your registered retirement savings plan (RRSP) to pay off unexpected bills.

Assuming you’ve incurred the debt yourself and you’re not desperate—and I mean really desperate—don’t pay your bills with an RRSP withdrawal.

You acquired the debt on your own, so I recommend figuring out a way to pay it off without cashing in investments or consolidating loans.

When unexpected bills arrive, cash flow issues are normally the underlying culprit; either not enough income or too much spending. 

What can you do to increase your income or reduce your spending so you can pay off your bills? 

Withdrawing from your RRSP may seem like the easy way out. Paying off a debt by cashing in an RRSP or consolidating loans is just a temporary fix, and it starts a cycle…

Continue Reading On moneysense.ca »

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