Retirement planning getting you down? There are always smart ways to plan the financial aspects of your retirement.
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Affordability tips for first-time home buyers to securing a mortgage Nov 2nd
Q. My partner and I rent a two-bedroom apartment in Toronto in a great neighbourhood for $1,850 a month—so, a great deal. We have been living together for three years and would like to buy a house together next year, when we both turn 30.
Get the mortgage rate that works for you.Find the bes.... More »
When should you start taking CPP? Take it too early or too late and you could sell yourself short + MORE Dec 16th
Age 65 is considered the “standard” age for beginning both CPP and OAS, but you can start taking CPP any time between ages 60 and 70 and you can start OAS any time between 65 and 70..... More »
Investing tips for dual citizens of Canada and the U.S. + MORE Feb 3rd
Q. I am a dual Canadian/U.S. citizen. Due to this, I cannot make use of a TFSA, so once my RRSP is maxed out, I’m stuck with non-registered accounts. I plan on putting a large part of my savings into a U.S. robo-advisor or U.S.-listed ETFs. As for my RRSP, I was wondering whether I should foc.... More »
What’s my RRSP contribution limit for 2021? + MORE Jan 18th
If you’re like many Canadians, you’re hoping you’ve paid enough tax in 2021 and may even be looking forward to a hefty tax refund. (The deadline for filing this year is April 30, 2022, which is on a Saturday, by the way. So you actually have until May 2, 2022 to file.) You can help ensure that.... More »
Skipping the starter home for the next size up? Be financially savvy about it May 4th
Taking on too big a debt load can leave first-time buyers house poor, unprepared for retirement and stressed by ordinary purchases for things like car repairs and vacations, Lesley-Anne Scorgie writes..... 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%…
