What’s the right retirement asset mix if you have a DB pension? + MORE Mar 10th

Retirement planning getting you down? There are always smart ways to plan the financial aspects of your retirement.
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Should Pete sell mutual fund to pay down the mortgage? + MORE Mar 24th

Shutterstock Q. I have $103,490 left on my mortgage and I pay $325 bi-weekly on it @2.89% fixed rate (mortgage is being renewed shortly). I have the ability to pay off up to 15% ($18,700) of the original mortgage annually in a lump sum without fees. Should I pull money out of my mutual funds (averag.... More »
 retirement savings plan

Timing CPP and OAS with workplace pensions Mar 31st

Q: My husband is retired military and will turn 60 this year. He’s been told by his military buddies that he should apply soon for his CPP as then he can receive it and the bridge for the next five years. I thought he should be delaying on taking his CPP but perhaps it’s the OAS he should dela.... More »

Chicago Has Another Bond for You Aug 19th

The city may try to paper over its pension woes with new debt..... More »

Who Wants to Support a Millionaire? Dec 2nd

The median American household can’t come close to affording the pension benefits of career government workers..... More »

Ladies, start saving 20 per cent for retirement Apr 28th

Women can unlock their financial potential by growing their financial confidence..... More »
Can I reclaim the withholding tax on my U.S. stocks?
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…

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How to avoid outliving your money(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…

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RRSP top-ups in retirement could cost you
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
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…

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What’s the right retirement asset mix if you have a DB pension?(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%…

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