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RRIF withdrawals Pre Covid-19 no tax withhold amount vs new minus 25% minimum
June 8, 2020
8:03 am
GICinvestor
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2of3aintbad said
As far as I know, the 25% reduction in minimum withdrawal is for 2020 only. Has anyone seen where it is confirmed that this will continue beyond this year?  

According to this article it is temporary. And after I read a few other articles it was just another half assed helping hand for the seniors that amounts to nothing!!! If you already had your payment....no adjustment......if have had previously set up your payment amount...no automatic change by the FI....this seems to have been more hassle than good.....but only for those that really wanted a lower RRIF payment.

What I have heard, with longer life span there is a need to lessen the payments to prolong a lower but regular RRIF income and I actually did think it was permanent.

There is no doubt in my mind that seniors income and retirees pensions are of no huge concern of the Liberal government.

June 8, 2020
8:21 am
Bill
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Have to remember, this was brought in due to virus. At this point the assumption is the virus will only affect 2020, I assume if that changes they might consider doing something for next year. Might be an idea not to withdraw early in a year, things like this might come up again that end up favoring those who haven't made their withdrawal yet. We now expect gov't to give us immediate financial breaks when bad things happen, might be happening more going forward.

June 8, 2020
8:38 am
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Cruzinalong said
I worked out how much to withdraw from RRSP to pay off TFSA each year. I did not bother. You are married. You can split certain types of income with your spouse. Company pension and CPP. I have some married friends. He said not many couples have two well paying incomes with company pensions. They save lots with income splitting.

I only mention income splitting as one benefit of withdrawal of RRIF funds vs withdrawal of RRSP funds.

You just might want to review if there any benefits for you, (as we all have like you say unique financial plans), to use TFSA and know what kind of funds can be transferred, transferred in kind or deposited into TFSA.

I do know that “some” financial advisors are suggesting that “some” of their clients move RRSP/RRIF to TFSA.

June 8, 2020
9:45 am
2of3aintbad
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GICinvestor said

According to this article it is temporary. And after I read a few other articles it was just another half assed helping hand for the seniors that amounts to nothing!!! If you already had your payment....no adjustment......if have had previously set up your payment amount...no automatic change by the FI....this seems to have been more hassle than good.....but only for those that really wanted a lower RRIF payment.

What I have heard, with longer life span there is a need to lessen the payments to prolong a lower but regular RRIF income and I actually did think it was permanent.

There is no doubt in my mind that seniors income and retirees pensions are of no huge concern of the Liberal government.  

Thanks for this link. It makes sense that if you made your minimum withdrawal early in the year, before the stock markets crashed, you should not be able to take advantage of the reduction.

June 8, 2020
12:23 pm
cruzinalong
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2of3aintbad said

Thanks for this link. It makes sense that if you made your minimum withdrawal early in the year, before the stock markets crashed, you should not be able to take advantage of the reduction.  

For people that withdraw late in the year the market will recover by then. My portfolio is not down 25% from December. Depending on your mix it may be up for the year. Many options allowed. Not for everyone. each person is UNIQUE.

June 9, 2020
12:30 pm
pooreva
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Thank you everybody for your comments!
Most folks mention TFSA; when you talk about TFSA do you think about just plain TFSA - cash in GIC or buying any other instruments (stocks, bonds, ETF, etc.)?

June 9, 2020
12:36 pm
cruzinalong
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pooreva said
Thank you everybody for your comments!
Most folks mention TFSA; when you talk about TFSA do you think about just plain TFSA - cash in GIC or buying any other instruments (stocks, bonds, ETF, etc.)?  

Do what your priorities are.

June 9, 2020
12:36 pm
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pooreva said
Thank you everybody for your comments!
Most folks mention TFSA; when you talk about TFSA do you think about just plain TFSA - cash in GIC or buying any other instruments (stocks, bonds, ETF, etc.)?  

It depends upon how you or friends looks upon a TFSA.
Permanent never touch till needed.
Temporary emergency fund.

So depending on those levels you would invest accordingly into something you feel comfortable with.

Permanent never touch till needed.
My preference is high interest GIC's in a 5 year ladder.
That is my comfort level. Others will differ.

Temporary emergency fund.
Could be in a HISA account.
Could be in 1 year GIC's
Could be in a 1 year cashable GIC.
Or any combination of the above.

June 9, 2020
4:46 pm
pooreva
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Thanks GICinvestor. That is what I personally do and what I recommended to my friend - do not play with stocks, go for plain cashable GIC... At 60, do you really want to play games on market?
I see term 'ladder'. Would you mind explaining that to me?

June 9, 2020
4:59 pm
pooreva
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----------------------------
Go more GIC? Turn on all interest to pay annually and use interest only to live on, if possible. They need some one to review everything before a decision is made.

BTW. After I was let go, a few months later I landed a good job for $60,000 a year.....worked 3 days.....quit.....and never looked for employment again.
----------------------------
To live of interest only these days you would need 1 million. Assuming you have no mortgage, debt, loans and other money sucking instruments.
But then, having a million if you are 60 expecting to stay sane until 80, OK 85, you can just take every year 40K from your principal and you would live good life. I think...

So, you were out of work force at 56. You mentioned - never employment again. WHAT did you do and what do you do now during the day? This is serious question.
My friend is LOST; absolutely lost. She did not expect 'reorg' and loosing her job (nothing to do with covid). She is not that concerned about money but how NOT to think of those ba$tard$ who let her go.

June 9, 2020
5:08 pm
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pooreva said
Thanks GICinvestor. That is what I personally do and what I recommended to my friend - do not play with stocks, go for plain cashable GIC... At 60, do you really want to play games on market?
I see term 'ladder'. Would you mind explaining that to me?  

There are articles that may better explain in different ways.

So here is my explanation.
You have $5000.
You make a five year ladder.
So $5000 divided by 5 years = $1000 per year.
You now invest as follows.
$1000 in a 1 year GIC.
$1000 in a 2 year GIC.
$1000 in a 3 year GIC.
$1000 in a 4 year GIC.
$1000 in a 5 year GIC.
Then at maturity you renew each GIC for 5 years.

You always shop for the best 1 2 3 4 5 year rate. You don’t have to put in all in one FI. You ask the FI to deposit the funds, at maturity, into the *associated saving account. You keep written records or notes of phone call with name, date and time. And also keep some type of record or calendar of GIC interest payments and maturity dates. I use excel and one of those larger booklet calendars that your realtor mails to you every year.

You then reinvest principal and/or interest for a 5 year GIC. You now, in five years, have all GICs in a 5 year rate with a blend of the highest rate for that year. You learn to stay on track and believe and trust what you are doing.

*That is where Oaken fails as they don’t have associated savings account for registered funds. And where People’s Trust fails, as last checked, as they do not have RRIFs at all.

Any questions?

June 9, 2020
5:37 pm
cruzinalong
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You can consolidate ALL your GICS at one FI. They are all competitive. .1%- .25% more a year is not going to change us. It is not worth switching. One FI. One T5 in the spring.

June 9, 2020
5:43 pm
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GICinvestor said

There are articles that may better explain in different ways.

So here is my explanation.
You have $5000.
You make a five year ladder.
So $5000 divided by 5 years = $1000 per year.
You now invest as follows.
$1000 in a 1 year GIC.
$1000 in a 2 year GIC.
$1000 in a 3 year GIC.
$1000 in a 4 year GIC.
$1000 in a 5 year GIC.
Then at maturity you renew each GIC for 5 years.

You always shop for the best 1 2 3 4 5 year rate. You don’t have to put in all in one FI. You ask the FI to deposit the funds, at maturity, into the *associated saving account. You keep written records or notes of phone call with name, date and time. And also keep some type of record or calendar of GIC interest payments and maturity dates. I use excel and one of those larger booklet calendars that your realtor mails to you every year.

You then reinvest principal and/or interest for a 5 year GIC. You now, in five years, have all GICs in a 5 year rate with a blend of the highest rate for that year. You learn to stay on track and believe and trust what you are doing.

*That is where Oaken fails as they don’t have associated savings account for registered funds. And where People’s Trust fails, as last checked, as they do not have RRIFs at all.

Any questions?  

GICinvestor. And EXCELLENT description. I learned quickly when I started saving to purchase 5 year GICS. Not sure if the term laddering was used in those days. My plan is to have ALL GICS mature in the same month each year.

June 9, 2020
5:55 pm
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pooreva said
----------------------------
Go more GIC? Turn on all interest to pay annually and use interest only to live on, if possible. They need some one to review everything before a decision is made.

BTW. After I was let go, a few months later I landed a good job for $60,000 a year.....worked 3 days.....quit.....and never looked for employment again.
----------------------------

To live of interest only these days you would need 1 million. Assuming you have no mortgage, debt, loans and other money sucking instruments.

I have only recently turned on interest payments. That has to be a call when you see it could be used. If not used, let it accumulate and reinvest in a $1000 GIC. Keep in mind cost of living while on fixed pensions and a few bucks more for CPP will need bolstering. I suggest to use interest first then principal. You have to best analyze your income vs your daily, weekly and annual expenses (a concise budget). I chose interest to bolster income and will continue to not touch any TFSA, RRSP, or RRIF money. It’s a personal and unique decision to tailor to your own needs. And YOU will be the BEST planner/advisor for YOURSELF.

But then, having a million if you are 60 expecting to stay sane until 80, OK 85, you can just take every year 40K from your principal and you would live good life. I think...

You could do......but like I said you need to know your income and your savings and then learn to manage them.

So, you were out of work force at 56. You mentioned - never employment again. WHAT did you do and what do you do now during the day? This is serious question.

I do whatever, whenever, and can pretty much do anything that is thrown at me. BUT no extension ladders and no interior/exterior house painting. I am driven to take a walk every day, keep the house and garden in great shape, to fix anything that is presented to me and relax etc. I do it all my self except for a very few things that I will pay someone to do. I am fantastic on financial stuff and using excel.

My friend is LOST; absolutely lost. She did not expect 'reorg' and loosing her job (nothing to do with covid). She is not that concerned about money but how NOT to think of those ba$tard$ who let her go.  

Losing my job was a blessing. I lived in BC all my life. Then the company moved to Calgary and due to my age and near retirement, it pretty much forced me to move. I hated it there...the city....the poor workforce.....the new job.....the lack of organization with the majority of all new people. For the five years I was there we had 100% turnover. On top of all of that I also got what is called situational depression. My wife and I made a pact that we would leave on my 40th anniversary with the company in April or my birthday a few months later. We had sold our very very nice new home and moved to a rented condo with an air mattress, few pots and pans, a TV and some patio chairs. It was rugged! We also had a brand new house sitting for us, fully furnished waiting for us in BC....just waiting for one of the two target dates. And so nicely it worked out.....I and 250 other managers were let go on the same day in October (before my first target date in April). I was given 2 years severance, my pension, a CPP bridge, and all my benefits continued. I also was one of the few that was offered to stay till the end of December and I stupidly, took the option to stay. Once back in BC I was much happier and in a few years was totally off of medication for depression and am pretty much back my normal self. So I have no hard feelings as my plan worked for me much much better than planned.

What I really miss is all the people that I worked with....the good ones....and even the not so good ones. They all had there values, ideas and ways of contributing.

But since all that I have lost all my company benefits and 30% of my company pension....same as everyone else.

Often those that are let go...do better some where else....and will be happier. The reason why etc. would be a business decision.....these decisions happen every day and there is nothing you can do about it if you were treated fairly within or exceeding the labour laws of the province and the HR policies of the company. I don’t know how many times I had to let some one go.....it is not easy to do...and it can haunt you for days and be a permanent memory. I was upset even though I had a plan to leave....but by the time I got home I was better. My wife asked what are you doing at home! My reply was...yahoo....I just got fired!

June 9, 2020
6:09 pm
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cruzinalong said
You can consolidate ALL your GICS at one FI. They are all competitive. .1%- .25% more a year is not going to change us. It is not worth switching. One FI. One T5 in the spring.  

There is auto fill! Also for every % point higher and you are doing it yourself, and you are retired and have the time....a few more T5 entries will take take you maybe a half hour......that’s $2000 per hour.

June 9, 2020
6:12 pm
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cruzinalong said

GICinvestor. And EXCELLENT description. I learned quickly when I started saving to purchase 5 year GICS. Not sure if the term laddering was used in those days. My plan is to have ALL GICS mature in the same month each year.  

That is pushing it!! I try to have maturities every quarter....and not evenly divided. Too much work and could be to your disadvantage rate wise.

June 9, 2020
7:17 pm
cruzinalong
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I bought 5 year GICS when I had the funds. You needed a minimum of $100 to purchase back then. I have one friend that says invest once a year. My method is simple. Eventually I will have 5 GICS. Not worth having to renew one each quarter. You can have different weights in each one. It will work as well. I have very little in GICS. Fine tuning that works for me. Enjoy the summer.

June 9, 2020
7:40 pm
Bill
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pooreva, if you're social (I think most are) retirement can be hard, so re-entering the work force might be the ticket, get to be with the world every day. It was easy for me, I keep myself busy and prefer my own company, for days on end if it happens, while I do my stuff. I've observed that pattern, i.e. social vs non-social, in others re how they feel after leaving workplace.

June 10, 2020
3:24 am
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cruzinalong said
You can consolidate ALL your GICS at one FI. They are all competitive. .1%- .25% more a year is not going to change us. It is not worth switching. One FI. One T5 in the spring.  

That only works if you have low enough savings that you can keep them all insured in one place or if you put them all into a MB CU with unlimited insurance.

Personally, I would never do it this way, regardless. I wouldn't want that one FI to go bust on me and have to wait ages to get reimbursed by whatever insurance system.

Nice personal story, GICInvestor. Glad it worked out for you. It shows too how important it is to know what you really want out of life. That way, you can recognize what it is if it should hit you over the head unexpectedly! lOL

June 10, 2020
8:05 am
cruzinalong
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True. When I started the CDIC limit was $60,000. I made my deposits to one FI. I got to around $50,000. I started transferring funds to other trust companies. I never came close to the $60,000 limit again. I had at least 2 trust companies fail. Dominion Trust for sure. I think Cabot Trust. I think Counsel Trust. Not sure when the limit changed to $100,000 since I stopped buying GICS. Can anyone confirm/deny Cabot or Counsel failures? Does anyone recall when limit increased to $100,000?

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