Retired? A few Pensions? Over 71? Non Registered Savings? Do you have a rule of thumb % to take? | Your stories | Discussion forum

I understand why you are hesitant to divulge more information, but you have only created a rudimentary sketch. Do you have kids, or do you want to leave a legacy for kids or a charity? I am roughly a decade younger than your 71 value (although you may be quite a bit older than that figure) and I generate enough investment income that I do not require funds from my RRSP or RRIF in your case.

A friend of mine (an engineer by training and work history) says that it does not make sense to remove funds from an RRSP or RRIF prematurely as the compounding of investment returns will compensate for his assumed tax liability upon death of either him or his spouse). I have never modelled it as it seems like an esoteric exercise. He is also in a position where he does not likely need to overmanage his RRIF income.

My brother was in the wealth management field for many years and one of his colleagues was a bit of an outlier and recommended to clients to withdraw funds from their RRSP prematurely if they could take advantage of lower tax rates than contemplated at death. It was never clear to me if he had done the time value of money calculation on prepaying income taxes.

However, given the new normal of obscene government deficits and the new normal of wasting huge amounts of societal resources on defense spending, I think one needs to reevaluate the likely tax rates at the time of death of the longest living spouse. I suspect that a sea change is likely to occur between now and when you die as respect to the top marginal tax rates in Canada.

So, I have no practical advice for you, but hopefully I have provided some food for thought.

The base case is to do nothing as in option b). Let tax deferment work its magic for as long as you are vertical. The variables are too wide ranging to make an informed decision. Besides, your estate tax bill is not something you ultimately care about. Your beneficiaries should be gracious for anything they ultimately get.

I will likely have a significant legacy to leave behind but yet am only drawing on RRIF minimums. No one knows how one's estate may play out. One's executor and heirs may make generous in-kind charitable donations to offset much of the tax bill anyway.

There can be cases where one's income is so low between retirement and taking CPP and OAS at age 70 that disproportionately drawing from an RRSP/RRIF makes sense to meet one's cash flow needs but that is a relatively rare specific case. It is typically no longer the case once one is drawing CPP and OAS.

It's certainly interesting to get these different viewpoints.
Thanks to all for posting
They kind of mirror my internal debate--i.e. the one going on inside my brain.
Perfectly good arguments on either side
No right or wrong
For moi, pretty sure I will stick with the "do nothing" approach

I observe the biggest diff from one gen to the next gen is the younger gen are always more willing to spend, almost too willing in some cases. While the more mature gen accumulates more than they will ever need, and even in their sunset years just dont want to spend much if at all.

Enjoy that hard earned money you have saved / invested all these years. The only "hard" part is not finding something to spend it on, but rather one need to stop thinking about needs/wants or justify every spending.

Two words to consider for those who can't picture spending more than their current purchasing pattern: Medical tourism.

Sooner or later, there is likely to be some maintenance needed on your body that the Canadian health care system puts you in a queue of many months, if not years, to address.

Then you have a choice: experience reduced quality of life during the waiting period - which could be a double digit percentage of the time you have left in this life, or get busy planning a trip to Singapore, or some similar medical tourism mecca, where they can't wait to fix you up!

I have a friend in his late 70s who loves ballroom dancing with his lovely wife. In his early 70s, he needed a new hip, and in BC the wait was 2 years (and that was before the pandemic). So he broke into his RRIF, went outside Canada and got the new hip in three months (including a month's convalescence in a warm sunny place when it's cold and wet in Vancouver). He's been happily dancing ever since then. And those years he would have had to sit on his couch probably would have shortened his life further, and likely made him wished he was dead during the long wait for surgery.

Bill said

Rail Baron, wouldn't surgery like that require follow-ups, etc?  

Yes, there are two kinds of follow-ups. First, the in person ones during the convalescence where one stays put after the procedure, and second, long term checks after returning to Canada.

When one departs the country/hospital where the procedure was done, a dossier of all relevant medical info is provided to be transferred into one's records with the specialist/family practitioner in Canada. Just because they can't get one on the table to do the procedure, so to speak, for many months or years in a queue doesn't mean that they cannot provide post operative care as and when needed. That's what happened to my friend, and he's been dancing happily ever since.

AltaRed said
I agree with ex-Canada medical procedures when the Canadian wait list and quality of life deteriorates ad nauseam for an extended period of time.

Spouse and I wouldn't give the Canadian system more than 3-4 months to fully address our surgical issue before we'd jump on a plane or even drive 200km or so to a fine US facility. We fully expect to have to do that some day, potentially more than once.  

Be sure you get a reliable estimate of the costs if you venture into US medical care. It's an order of magnitude higher than some of the world's best alternatives - like Singapore.

One data point: in March, I spent about four hours in an ER on Oahu. Got full blood work, CT scan, and other tests, just to rule out anything more serious than an intracostal muscle strain - which can feel like something is going wrong with one of your internal organs.

Total cost: USD 12,000 for four hours of top quality care. I'd have spent 12 hours or longer in a Canadian ER to get the same outcome. On my way out of the Oahu ER, I asked the billing clerk what it would have cost if I'd been admitted to the hospital overnight - answer: $35,000 minimum!

So those US hospitals are in a class by themselves when it comes to cost. Unless one is covered by emergency travel medical insurance as I was, it's much more affordable to fly halfway around the world in business class to get a major medical procedure done. Once my Hawaiian hospital bills all were paid, took a couple of months, but I got the full $12k reimbursed by Pacific Blue Cross.

It's a no-brainer to pull out RRSP funds if there's no tax implication (due to low net income) room to put them into a TFSA.

Organic and natural foods are a trendy scam. There is NO evidence of any health benefits. They just make some people feel better.

RetirEd said
Organic and natural foods are a trendy scam. There is NO evidence of any health benefits. They just make some people feel better.  

I can only say, what I know for sure.
I grew up and spend my first 25 years in very rural area.

We also baked our own bread, because no town and/or any store close to us.
Everything was from our garden.
A few cows, pigs, chickens, rabbits, etc.
From forest wild berries, mushrooms, herbs.

So, I have some idea, how pastured raised beef, chicken, eggs should taste.
Pastured all year around, not grain fed in winter.

Whatever AI says and RetirEd think, simply do not matter to me.

I have my own taste and can distinguish between real food and chemical one.