Myth #5: Once house paid off, max. RRSPs (or borrow for)
Many retirees in Canada are painfully finding out that they are in a tax bracket at is the same, if not higher, than when they were working.
The reason is that come retirement there are fewer deductions and exemptions to be had.
Furthermore, many individuals are receiving good pensions from their old employers (teachers, fire fighters, policemen, etc.).
By the time all this is taken into consideration there is no noticeable difference in their tax bracket. I know, because I have many of these
individuals as clients and I am seeing this first hand…
In fact, in some circumstances, those with sizable RRSP assets are experiencing the Old Age Security (OAS) “claw back”.
This means that of the approx. $8400 annual income that every 65 year old Canadian is entitled to begin receiving from the Canadian government
can be partially or totally “taxed back”…
The reason is that RRSPs form part of what is known as the “means” test for this government pension.
One could have a million dollars in a non-RRSP account and get the full OAS government pension.
But by having to much in RRSPs, could put them “off side” and they will get a partial or total “claw back” of OAS…
Now just think about this.
Canadians for years have been told that they should be contributing heavily to RRSPs to see them through retirement…
Then, only to be told “at the end of the game” – sorry! You have to much saved and we are now going to take away a pension that we had promised
Myth #5: Once house paid off, max. RRSPs (or borrow for)Pt.2
Canadians! When it comes to your mortgage…
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Curious but still on the fence?
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“For years, I was the guy that thought paying off your mortgage & maxing out my RRSPs were the top priorities.
Now that I really look at it, I couldn’t have been more wrong…” Kelly, Edmonton, Alberta
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