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Who's the best overall RRIF carrier?
March 16, 2019
11:47 am
Londonguy
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I'm in the process of creating my own pension income and I'm not happy with what BigFive is offering. I'm therefore trying to evaluate the best overall place to open a RRIF based upon a combination of the carrier having (1) consistently good rates, (2) limited fees, (3) competent customer service, and (4) a user friendly online platform.

After doing a bit of research I haven't found an obvious choice yet, so I'm looking for input from the community.

Not everyone has the same needs, so that's an influence on how people perceive who's best in terms of bells & whistles. In my own particular case, besides needing superior interest rates, I need a savings account feature to hold cash, and I also want to be able to manage my taxation levels by being able to pull out whatever I want, whenever I want if necessary (over the statutory minimums) without incurring excessive administrative charges.

Any carrier suggestions or other wisdom on structuring a RRIF or multiple RRIFs to drive around the various shortcomings of specific carriers would be gratefully received. Does anyone have any input and/or experience to share on the subject?

March 16, 2019
12:44 pm
Rick
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I went with Hubert as I liked their rates and payout flexibility for RIF's. A few only allowed RIF/GIC payments annually.

March 16, 2019
1:32 pm
Dean
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Another vote for 'Hubert Financial' sf-cool

Check them out ... https://www.happysavings.ca/

I don't think you can go wrong with Hubert.

sf-cool " Live Long And Prosper " sf-cool

March 16, 2019
9:42 pm
Loonie
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I see two disadvantages to Hubert - for me.

1. Located in another province. Potential problems for POA or estate, remembering that credit unions are governed by provincial laws.
However, this will not be a deal-breaker because I can't find a non-MB-CU that meets the other criteria.

2. Hubert is the only FI I know of which refuses to offer a one-year RIF GIC.

I have been working with converting, transferring, withdrawing, closing RSP/RIFs for a few years.
I find this awkward without a one-year GIC option. Most of it is laddered, but I do like the one-year GIC for withdrawal flexibility as it pays more than savings rate. There is always a float that needs to be reinvested for another year, although the amount varies.
Other people may want access to a one-year GIC for other reasons.
And for some it may not matter at al.

I use Hubert for other investments and am happy with them generally.

Other options:
A. Achieva. It seems to do everything needed, and there is no transfer-out fee. Rates are competitive although they have tended to be lower than Hubert in the past.

B. Accelerate. They allow a free additional withdrawal up to 20% of value of RIF. This would almost certainly cover my needs. I'm not sure if this can be done over multiple withdrawals. Transfers-out are $50.

C. Wait to see new offerings from motusbank (coming very soon), or Coast Capital when it rolls out federally.

I'm repeating some of these comments, but it's best to have them in this thread.

March 16, 2019
10:47 pm
Denise Milani
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While Loonies comment in regards is in the back of my mind and is not to be overlooked I am:

With Hubert for non registered, TFSA and RRSP GICs. I plan to move all my TFSA and non registered GICs away from them. That will reduce my presence in Manitoba. I then will use Hubert to flush my RRSPs to RRIF to non register to TFSA at another FI (Accelerate). It appears I will have full control with very little assistance from Hubert. I like that feature. And I like that they have associated savings accounts.

I am with Accelerate and most of my TFSAs are with them and will likely move all my non registered GICs to Oaken. And I like that they have associated savings accounts. I have a chunk of cash in Accelerate and wonder if Oaken would be the place to move it too....but they have no bill payments I.E. income tax, CRA. Any better places for cash??

I am with Implicity for non registered only and will soon leave them. Nothing wrong with and if I don’t leave them I may just keep them for backup. And I like that they have associated savings accounts...I think as I don’t have any registered money with them.

I am with Outlook Financial for non registered and TFSA and will soon leave them. They have screwed up too many times!! But I like that they have associated savings accounts.

I am with Oaken for non registered, TFSA and RRSP. And I DON’T like that they DO NOT have associated savings accounts. My TFSAs will transfer at no fee to Accelerate. My RRSP will stay for now but will feed as needed to Hubert to allow me to manage “MY WAY” as unfortunately Oaken has self imposed restrictions with no RRSP or RRIF savings accounts. I may keep some TFSA with them if I can have interest paid annually to my non registered savings account and have yet to contact them but would be better to have TFSA interest in a TFSA savings account for a rainy day plan. Oaken is ok if you keep your funds per account type and Home bank/trust used at no more than $90,000.

Have have People’s Trust and will leave this year. Rates once competitive and 3% on savings account is no more. Got in toooo late.

I have iTrade and will leave them.....GIC rates are too low.

So that will leave me with Manitoba for TFSA at Accelerate and Hubert until my RRSP RRIF is flushed through and the rest with Oaken.

In the event of probate the federal bank Oaken has an office in Vancouver and I do know my way around Winnipeg and would enjoy the drive north to Selkirk. While probate might be a issue or a time delay funds would help from Oaken.

So for me I have found the variety that best suits my needs for know. As I have had all accounts for at least 5 years I finally figured it out!! And things and needs change as I’m closer to the compulsory RRIF withdrawals to wind down my RRSP to TFSA to put me in a lower income bracket to hopefully allow me to enjoy some income based programs.

So who is the best RRIF carrier? What are your needs? I imagine we all may have different variations of needs thus the preference to a specific FI. And keep in mind a lot of CUs have unlimited insurance while banks have only $100,000 per types of accounts.

March 17, 2019
1:52 pm
Londonguy
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This is all great information and much appreciated, and it spawns a lot more questions.

On the specific issue of RRIF withdrawals, within the Manitoba CU space (since they seem to be the top carrier candidates here), is the minimum RRIF withdrawal typically a free transaction?

Does the FI distribute the minimum on their own with no input from you, or do you have to agree to a payment schedule when you set up the RIF? Are you stuck with that arrangement forever? Do they charge you if you want to change the schedule?

Do the FIs process your RIF minimum payout as a separate transaction, or can you instruct them to pay out the minimum+X on date Y?

What's the usual fee for taking out more than the minimum? Loonie suggested that you can take up to 20% out of your RIF at Accelerate without a fee, and I would consider that a significant advantage. Does anyone know for sure whether that's a one-off thing? As in, one freebie per year? Once in a lifetime?

Also, what about the frequency? I'm curious because if you wanted for example to schedule a monthly vs annual withdrawal, that's 12 transactions instead of one, and I wouldn't want to be paying $50 each for 12 transactions. I'm probably going to go with a single annual withdrawal (or the minimum + a topoff if I have to split them) around the first of each December to mitigate the delay in recovering WHT, but I'm still interested in knowing the answer in case I want to change my approach.

FYI I also read on one website (can't remember which) that withdrawals were free as long as they went into a companion non-registered savings account at the same FI, which I assume you could then pull out for free from another online FI. Is this common?

I know I could call up all the FIs being mentioned and ask them these questions myself point blank, but if somebody already knows the answers, please chime in.

Also... and maybe I'm an outlier on this... and even though we don't need access to our retirement capital near term, my spouse and both intend on deferring CPP/OAS as long as possible and drawing down our RSP/RIF pools much faster than the rules allow in order to manage our long term income tax expense. I'm aware that there's professional debate on the subject, but the underlying intent is to efficiently "re-accumulate" tax-paid capital outside the RSP/RIF structure before age 71 and avoid having the last survivor leave over 50% of a huge undistributed RIF to the taxman. In addition, the enhanced dual CPP/OAS stream will be indexed to inflation, whereas the RIF streams won't be. Does anyone else do this, or do people usually just take the RIF minimum?

(That last paragraph could probably be a topic all on its own)

March 17, 2019
5:45 pm
Loonie
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I will tell you what I know and what I have reason to assume, but you may still need to pose your questions directly to your short list.
My RIF experience so far has been with FIs that are not on my short list, and that's why I too am looking for a new one.

There were no charges for the mandatory withdrawals at the other FIs I dealt with, which included one of the Big Five. I assume there are no such charges anywhere else.

Oaken smoothly deposited the mandatory minimum into my external savings account. So, if others don't, that is not necessarily predictive, and you need to ask.

I would say you are likely stuck with whatever arrangement is in place at the beginning of the GIC. Someone else pointed out that you can probably change it when you take out a new GIC. If it's in a savings account, you should be able to change it whenever. Note though, that if you transfer an RIF, the govt requires that the relinquishing FI must take out the minimum for that year before transferring, regardless of what you set up.

You NEED to be involved in setting up the withdrawals. I have found that some FIs are lackadaisical about this and seemed surprised when I insisted. Tangerine is an example. I don't understand this except that perhaps they don't do it very often (?) (!) I had a hard time getting them to even du the conversion when I wanted it done!

When you set it up, there are two things you need to be mindful of.
First is making sure it gets calibrated to the correct birthdate. You should pick the birth year of the younger spouse, assuming there is a difference. Then you can both be treated as having the younger birth year. You can always take out more if you want, if not through Accelerate's plan, then through RIF savings account or maturing GICs, but keeping it at the lowest rate gives you the most flexibility.
Second is the choice of the date of withdrawal. I believe some allow monthly withdrawal but don't know if there is a charge for that or perhaps a lower rate of interest? You might want to give some thought to what part of the year you want the money to be withdrawn. But, in any case, it is your choice when, during the year, to make the withdrawal.
I guess I should also mention that you will need a new beneficiary form, even if within the same FI as the RSP was held.
I believe you can instruct them to withdraw the minimum plus Y, but have never done this, so can't speak from experience. Just remember that you will be charged withholding tax on the amount over the minimum. This may affect your decision about when in the year you want to schedule the withdrawal.

There is not necessarily a fee for taking out more than the minimum. However, you will likely only be able to take it from a savings account with the exception of Accelerate's offer. (I assume Accelerate will allow you to take it out of the GIC, but need to ask.) I asked Oaken once about possibly taking more out of an RIF GIC if needed for medical expenses for example, and could not get an affirmative answer.

You are not an outlier as far as I"m concerned. I have been doing the same strategy. I didn't delay OAS, CPP because, at that time, it seemed that taking it was better. However, spouse (younger) is delaying.
this is a strategy that is recommended by some retirement planners. YOu might find it useful to read Daryl Diamond's book (second edition). If you are a reader, I can probably recommend another book or two as well. Generally, however, financial planners have been less prolific on the subject of decumulation than on accumulation. You can probably guess why!

I haven't responded to all your questions because I don't know the answers to all of them.

March 17, 2019
7:58 pm
Doug
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Great video on setting up a RRIF - even I learned some things I didn't know, namely that:

  • at age 90 (or was it 91?), the mandatory RRIF withdrawal tops out at 20% - wowsers!
  • ; and,

  • your executor can apply for a deferment of your RRIF balance to your named beneficiaries, assuming, I guess, those payments are transferred into another RRIF, an RRSP, or an RDSP;

Very interesting!

Peter, can you either enable iframes to let people embed YouTube videos (they don't auto-play) or, alternatively, if Simple:Press has that functionality directly or by installing a plugin, enable a feature to embed YouTube videos directly without actually needing to enter the iframe code?

Cheers,
Doug

Edit: Interesting! I guess pasting a YouTube URL automatically embeds it! Nice! sf-cool

March 17, 2019
8:11 pm
Denise Milani
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On the specific issue of RRIF withdrawals, within the Manitoba CU space (since they seem to be the top carrier candidates here), is the minimum RRIF withdrawal typically a free transaction?

Hubert has no fees. Not sure about Accelerate

Does the FI distribute the minimum on their own with no input from you, or do you have to agree to a payment schedule when you set up the RIF? Are you stuck with that arrangement forever? Do they charge you if you want to change the schedule?

Send each FI you might want to deal an email asking your questions as they each have different policies.

Do the FIs process your RIF minimum payout as a separate transaction, or can you instruct them to pay out the minimum+X on date Y?

Send each FI you might want to deal an email asking your questions as they each have different policies.

What's the usual fee for taking out more than the minimum?

Send each FI you might want to deal an email asking your questions as they each have different policies. Depends if it is a payment from a 5 year GIC on payment 1 2 3 or 4 and could be different if the payment comes from your RRIF savings account.

Loonie suggested that you can take up to 20% out of your RIF at Accelerate without a fee, and I would consider that a significant advantage. Does anyone know for sure whether that's a one-off thing? As in, one freebie per year? Once in a lifetime?

That can be done ONCE every year say on a 5 year GIC. Very generous from Accelerate and they are the only one that I know that does this. All others would be ONLY the % based on age. But once again send each FI you might want to deal an email asking your questions as they each have different policies. My concern is how is the balance of interest calculated on the remaining principle.

Also, what about the frequency? I'm curious because if you wanted for example to schedule a monthly vs annual withdrawal, that's 12 transactions instead of one, and I wouldn't want to be paying $50 each for 12 transactions. I'm probably going to go with a single annual withdrawal (or the minimum + a topoff if I have to split them) around the first of each December to mitigate the delay in recovering WHT, but I'm still interested in knowing the answer in case I want to change my approach.

Send each FI you might want to deal an email asking your questions as they each have different policies. I would think annual only.

FYI I also read on one website (can't remember which) that withdrawals were free as long as they went into a companion non-registered savings account at the same FI, which I assume you could then pull out for free from another online FI. Is this common?
I know I could call up all the FIs being mentioned and ask them these questions myself point blank, but if somebody already knows the answers, please chime in.

Send each FI you might want to deal an email asking your questions as they each have different policies.

Also... and maybe I'm an outlier on this... and even though we don't need access to our retirement capital near term, my spouse and both intend on deferring CPP/OAS as long as possible and drawing down our RSP/RIF pools much faster than the rules allow in order to manage our long term income tax expense. I'm aware that there's professional debate on the subject, but the underlying intent is to efficiently "re-accumulate" tax-paid capital outside the RSP/RIF structure before age 71 and avoid having the last survivor leave over 50% of a huge undistributed RIF to the taxman. In addition, the enhanced dual CPP/OAS stream will be indexed to inflation, whereas the RIF streams won't be. Does anyone else do this, or do people usually just take the RIF minimum?
(That last paragraph could probably be a topic all on its own)

You can’t plan you or spouses life expectancy. Delay payments could mean no payments. And would the survivor get CPP survivor benefits? I would think yes. OAS would be lost and no OAS survivor benefit. And your later life would have a much higher income bracket which may disable you and spouse from any low income based programs. Possible OAS clawback too? Why not take OAS at 65 and CPP at 65 or earlier and bank it? Or use it for TFSA deposits and other investments.

=====================================================

I ladder my TFSA GICs for an amount that will buy me and my spouses TFSA from my RRIF Account AND WILL MEET OR EXCEED THE MINIMUM RRIF WITHDRAWAL. The rest of GICs are in a 5 year term. Any further withdrawals of RRIF are from a RRIF savings account ...the benefit of laddering and an FI with a RRIF savings account (something that Oaken does not have). We are both under 72.

Once we are 72 and over we will still ladder the amount that we predict we will need for each of our TFSAs and put the balance in a 5 year term. We will leave a couple thousand in RRIF savings should the TFSA contribution room increase.

March 17, 2019
9:13 pm
Denise Milani
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Here are some responses from Oaken, Accelerate and Hubert that was extacted a couple of years ago. I forgot I had it.

Oaken

For scheduled (or required minimum) RRIF payments, below is the order in which the system will make the payments from RRIF plan with multiple GICs (only 1,2,3,4,5 year RRIF GICs are offered at Oaken) at the specific payment date:

1) Interest- it will take whatever interest that has accrued on all RRIF GIC investment held in the plan, and if that does not satisfy the minimum then

2) Principal- it will take funds from the principal from the investment with
..............lowest interest rate
..............If the interest rate is the same between 2 or more investments then it will take the funds from the one that has the earlier issue date
..............If the interest rate is the same between 2 or more investments and they have the same issue date, then funds will be taken from the lowest active account number

If exceeding the mandatory amount. Maturity notices are mailed out 45days before the maturity date. At maturity of a RRIF GIC, a signed letter of direction (maturity notice) is required to be submitted for processing a redemption for the specified amount (and subject to the applicable withholding taxes).

===========================================================

Accelerate

If you hold multiple RRIF GIC's with Accelerate the mandatory required payment is taken from the lowest interest bearing RRIF GIC. If you hold RRIF GIC'S and a RRIF variable the payment is still taken from the lowest interest bearing GIC unless specified to be taken from the RRIF variable. No tax withhold.

If you request a specified payment, which means you would take a payment over and above the minimum on a regular basis. We would take the withholding tax only on the amount that is over your minimum RRIF payment. From savings account or mature GIC.

If you are looking at taking an extra payment after you have already received your RRIF payment then you can take an extra payment of up to 20% of the value of the RRIF and that is subject to withholding tax.

============================================================

Hubert

The RRIF annual payment is removed from the RRIF product receiving the lowest interest. If you have a balance in a RRIF savings account it will be deducted the entire payment, if only partial amount in the RRIF savings it will remove partial and the remaining payment amount from the lowest paying RRIF term deposit.

March 18, 2019
2:24 am
Loonie
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re: Layton's video.
The 20% mandatory annual withdrawal kicks in at 95. They want it to be all gone by the time you die, basically. Mandatory minimum withdrawal rates increase more rapidly the older you get. Somewhere around your mid-80s, this becomes very obvious, if not sooner.
For some people, this may create steep rises in income and thus more income tax payable. Accordingly, some people recommend that you turn your RIFs into annuities on a gradual basis beginning mid to late 70s or so, in order to even out your income. Gordon Pape, among others, has suggested this.
By doing this gradually, you can attempt to average the rates you get. In this way, you may be able to adjust your income to the desired amount.
This requires a bit of fancy footwork with your calculator because, as your withdrawal rate rises, your capital may decrease, affecting your annual income. You will need to figure this out before you decide to buy annuities, so that you can make a valid comparison for your particular situation.

I didn't really follow what he was saying about deferring RIF income for dependent children and grandchildren and somehow turning it into RSPs? It's not a concern for me.

March 18, 2019
9:12 am
AltaRed
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Doug said

  • at age 90 (or was it 91?), the mandatory RRIF withdrawal tops out at 20% - wowsers!
  • ; and,

  • your executor can apply for a deferment of your RRIF balance to your named beneficiaries, assuming, I guess, those payments are transferred into another RRIF, an RRSP, or an RDSP;
  •   

    As Loonie said, it is age 95 when the 20% kicks in. Actually a sound move because it helps reduce 'final T1 tax rate' upon death. Almost everyone still alive at age 95 is dead before 100. Actuarily, by age 93 or so, the probability of living one more year is only 50% so each year one survives past that age, one is beating the odds.

    Tax deferred transfers of one's RRIF can only be with a spouse (successor annuitant or standard beneficiary), or a financially dependent child or grandchild in which the funds can go into a RDSP. There are no other tax deferred options.

    Annuities were mentioned and that could be a good way to level out one's annual income starting at some age, e.g. 85 or so, but interest rates are so historically low now that annuity payouts are also historically low. Going to annuity depends a lot on one's belief on longevity, one's ability to continue to manage a RRIF, or one's trust in a POA to manage a RRIF. An annuity at that age is a solid 'sleep at night' factor.

    March 19, 2019
    8:41 am
    Londonguy
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    This is all great stuff, thanks for everyone who contributed their knowledge and experiences. Obviously I have a lot to think about before making any decisions.

    One thing I did want to address -- on the subject of delaying CPP/OAS, for us, one of the more compelling arguments for deferral was the prospect of getting an extra 42% in CPP (and almost as much extra in OAS), and then having those enhanced payouts indexed for as long as we live. The overall investment return on that deferral strategy is better than any risk-free investment we could make at present, and despite foregoing the money upfront, once it kicks in at the higher stream we'll be permanently ahead of the game (and keep piling up a bigger advantage every year thereafter) once I turn 77.

    However, as I said earlier, it remains a matter of professional debate because there are "no one size fits all" answers in the Canadian retirement game. Everyone's circumstances are different, their standard of living expectations are different, their health prospects are different, their views on the world's financial future may not agree, the ITA could change, and no, you can't know for sure when you're going to kick it -- but to plan you have to make at least some assumptions, and under the most likely scenario and lifestyle my spouse and I envision for ourselves, initial decumulation of RSP/RIF with a CPP/OAS deferral strategy yields the better long term result.

    On the subject of buying an annuity, which more properly should be called "selling your money to an insurance company", I remember back in the early 1980s when people were trading in their RSPs for 15-16% annuities. They've been becoming less and less attractive ever since, and at today's interest rates are currently one of the worst investments you can make IMO. Better to keep your $ invested in your RIF and pay out half to the taxman upon death and leave your heirs the residual, than to leave those same heirs with nada courtesy of an expired annuity

    March 19, 2019
    8:49 am
    Denise Milani
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    Better to keep your $ invested in your RIF and pay out half to the taxman upon death and leave your heirs the residual, than to leave those same heirs with nada courtesy of an expired annuity

    BUT YOU COULD CONSIDER - IF WORKABLE FOR YOU

    Even if you don’t need your RRIF or RRSP funds right now and you are in a lower income bracket consider fuelling your TFSA with RRIF withdrawals.

    March 19, 2019
    9:31 am
    AltaRed
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    I would tend to agree given low interest rates, but it also depends on how much one has to play with. If all one has is CPP and OAS and the RRIF looks like it could run dry by age 90 (leaving nothing much to heirs anway), it may be better to annuitize to assure increased annuity payments to the end of one's life. The decision can be highly situational.

    March 19, 2019
    2:35 pm
    Londonguy
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    AltaRed said
    ...If all one has is CPP and OAS and the RRIF looks like it could run dry by age 90...   

    If your resources are fairly limited, then fair enough, a different approach might be better. But a lot of people have amassed large RSPs that will then RIF, and they should consider killing it off early. As in, draw more than you have to or need in the earlier years to purposefully re-accumulate tax-paid capital outside the registered sphere such that the RIF is depleted at acceptable marginal rates within a specific time period, not necessarily as late as 90. Why pay any taxes sooner than you have to? Because taking only the minimum or near-minimum sets up the surviving spouse's estate for the big tax hit, when they could have bled out their RIF more efficiently if they'd been willing to pay some deferred tax along the way.

    TAX RANT ON

    I'm probably a bit preoccupied with the idea of tax minimization because of what happened to my own parents. My father died in 2000, when everything passed tax-free to my mother via beneficiary designation. She was nearly 7 years younger than my father and lived until late 2018 taking only the minimums, mostly because she refused to spend any money on anything out of a phobia about running out of resources. She never grasped the idea that she could take extra funds out, pay a little bit of tax on it, and then stash it somewhere else or even give it away while she was alive instead of waiting until she was dead. Long story short, when she passed she still had over $800K in her RIF, so CRA got over half of it. CRA also took a huge divot out of the present market value of the original family cottage near Wasaga Beach because, having bought the land and built in 1956, the ACB was effectively zero (making it nothing but a tax on government inflation). At least CRA couldn't touch the house in downtown Toronto that they'd owned since 1948, because it was still her principal residence.

    TAX RANT OFF

    March 19, 2019
    3:04 pm
    AltaRed
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    There are a lot of such threads on discussion forums about 'managed' accelerated depletion of RRIFs to optimize taxes over 10 or more years. Generally, I like the idea IF the investor has quite a lot of resources at his/her disposal, knows how to manage accelerated withdrawals, e.g. cap gains, TFSA, etc.

    There is even rationale for depleting a RRIF (for the most part) by age 70 and deferring CPP and OAS to age 70. All of this can be good if the underlying assumptions hold over time, e.g. not premature death, or excessive longevity, etc. I suspect for most people, the effort required to try and optimize may not be worth the PV of tax saved. YMMV.

    March 19, 2019
    3:41 pm
    Loonie
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    These are not easy questions. Here are some of my thoughts.

    Much depends , as AltaRed suggested, on how much capital and guaranteed income you have. The more you have, the more options you have that are realistic. That said, we all like to maximize income and most of us seem to want to maximize how much we can leave for heirs.

    RE: OAS.
    While it's true that the future is always a question mark, OAS may be more vulnerable than other aspects of the economy simply because it's a federal budget item, by no means guaranteed to be there for the rest of your life. I think it's almost inevitable that at some point in the next ten years, some government is going to revamp the whole system of income for seniors. This will include OAS, GIS, etc. This doesn't necessarily mean we'll lose it. The previous govt already fiddled with it by allowing deferrals and by projecting a later retirement date. Those who have deferred and are thus, by a certain standard, "entitled" to a higher return from OAS, may receive some protection/reward. However, deferrers are by far in the minority because most people can't afford to defer, so government may not care too much about that segment.

    While CPP is not vulnerable in the same way, it is worth noting that it has already been seriously tampered with under the previous government - something that most people aren't aware of in terms of benefits. While most of us know that the premiums went up, most do not know that the Survivor benefits went down substantially. Some widows have been impoverished by this decision. Retirement income planner Daryl Diamond notes, in the second edition of his book Your Retirement Income Blueprint, that such a reduction is unprecedented.
    I still have documents from CPP which promised that Survivor benefit would be 60% (allowing that the total could not exceed the maximum for an individual), but they have taken that away without announcing it. It's virtually impossible to find this documented and even harder to figure out how to apply it, but it's there in the gobbledygook of CPP legislation. Some people were grandfathered, and thus exempt from the change, but they had to have been born before a certain year in the 1930s, I think it was 1934 but not sure now.
    If they can do this to CPP, which is contributory, be sure they can do much more to OAS which is not.

    Whether or not you find the CPP decision ominous, OAS remains a budget item and subject to change. The people I know who have deferred CPP (not very many!) have tended not to defer OAS b for two reasons: they feel it is more vulnerable, and the deferral is not as valuable as the one for CPP. Perhaps also, they may need the money but have not told me.

    Having said that, here is my rationale in support of deferring OAS, which will not be valid for everyone.
    I work from the assumption that, as a retiree, my basic concern is to ensure that I have "enough" money at every stage of retirement, and to make that amount as bullet-proof as possible. What is "enough" will vary from person to person.
    I would break it down into stages: before 65 (if retired early), 65 to 70, 70-75 or 80, and post-75 or 80. Each of these stages has different income levels/sources and different likely expenditures. The question of OAS deferral affects 65+.
    From my point of view, if you have enough income in the years 65-70 without OAS, then why not defer it and take your chances with longevity etc.? It's a way of protecting your future years. I don't much care about trying to get my "share" before 70 on the theory that I might not live long enough to get it otherwise. If I'm dead, I won't care, but if I'm alive later, I will. Yes, it could affect capital available to a surviving spouse or to invest (may win or lose), so we need to look at the next phase. But remember that OAS for 65-70 is only about $36K total before any tax and clawback. Depending on your overall situation, this may not be a big potential sacrifice considering potential benefits later, remembering average life expectancy is now somewhere around 82.
    The 70s is when spending starts to decrease, depending on when you get to the point where you are no longer keen on travel - this has been shown statistically, I think by StatsCan but can't remember for sure. The more I have from CPP and OAS, the more secure my basic income sources comprising "enough" will be, allowing that I may also have a work pension, RIF, etc., but also allowing that the income from these may not be guaranteed at the full rate of inflation, that inflation in my area may be higher than the national average (in Toronto, it is, and our property tax increases are based on local CPI, but none of our inflation-adjusted income sources are), and that I may need to pay for supplementary health insurance whose premiums go up faster than CPI (trust me, they do!)
    The last phase usually kicks in between 75 and 85. This is when travel expenses cease but care expenses may go up in the final few years. Also, in the early 80s, you break even on OAS if you deferred it, and may actually gain as time goes on.

    If you have enough income to sustain you at every stage, I think it makes sense to defer OAS.

    Some will argue that increasing OAS later may deprive you of other income-tested benefits or increase the taxes you pay. It might. So what? My priority is simply having enough at every stage, not milking the system for things I could perfectly well pay for myself or leaving more money for someone else to spend. Some people are keen on taking as much as they can squeeze out of the system while also complaining about taxes and the size of government debt. I'm not one of them.

    If you've read what I've written carefully, you will see arguments both for and against deferral. Ultimately, the decision will depend on personal circumstances, primarily assets and existing guaranteed income sources.

    P.S. I just heard the Minister of Finance speak in the Budget about ensuring that all eligible Canadians are enrolled in CPP. I hope that doesn't mean forcing everyone to take it at 65 or messing with CPP "pension sharing". He probably just wants to ensure that everyone who can get it does and that they aren't taking money from GIS etc , which the government pays for directly, when they don't need to. It's a prudent decision, but we need to watch how it is administered.

    March 19, 2019
    6:24 pm
    JenE
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    Will someone tell me what Alta Red means by “the PV of Tax
    saved. YMMV”. Thanks sf-confused

    March 19, 2019
    6:38 pm
    AltaRed
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    Present value of tax saved, i.e. discounting taxes paid in the future, including end of life taxes, back to the present time.

    YMMV = Your Mileage May Vary is another way of saying it is situational according to one's unique situation.

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