Comments on: Is The RRSP Still Worthwhile? http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/ Investing and Personal Finance Sat, 20 Mar 2010 04:08:27 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: Four Pillars http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-6949 Four Pillars Tue, 15 Jul 2008 02:33:31 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-6949 Thanks for the info Leon. Mike Thanks for the info Leon.

Mike

]]> By: Leon Dykler http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-6942 Leon Dykler Mon, 14 Jul 2008 16:00:20 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-6942 Re: Four Pillars, CPP is not lost, regardless of country or location of residence. (Always consult a professional). Re: Four Pillars, CPP is not lost, regardless of country or location of residence.
(Always consult a professional).

]]> By: Weekly Dividend Investing Roundup - March 7, 2008 » The Dividend Guy Blog http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4255 Weekly Dividend Investing Roundup - March 7, 2008 » The Dividend Guy Blog Fri, 07 Mar 2008 15:34:53 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4255 [...] For us Canadian investors, Quest for Four Pillars asked, Is The RRSP Still Worthwhile? [...] [...] For us Canadian investors, Quest for Four Pillars asked, Is The RRSP Still Worthwhile? [...]

]]> By: Weekend Reading - March 7, 2008 | Million Dollar Journey http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4246 Weekend Reading - March 7, 2008 | Million Dollar Journey Fri, 07 Mar 2008 10:33:01 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4246 [...] Four Pillars writes about if the RRSP is still worthwhile.  Again, this article will look at the effectiveness of the RRSP compared to a TFSA account. [...] [...] Four Pillars writes about if the RRSP is still worthwhile.  Again, this article will look at the effectiveness of the RRSP compared to a TFSA account. [...]

]]> By: Four Pillars http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4215 Four Pillars Wed, 05 Mar 2008 02:38:46 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4215 CC - I am hoping to do a post or two on low income Canadians at some point. TFSA will certainly be part of that discussion. Mike CC – I am hoping to do a post or two on low income Canadians at some point. TFSA will certainly be part of that discussion.

Mike

]]> By: Cheap Canuck http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4213 Cheap Canuck Tue, 04 Mar 2008 20:29:42 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4213 I look forward to your post (if one is forthcoming) about low income earners and the TFSA vs RRSP for retirement saving. This is something I'm still trying to get my head around and the more info I can soak up the better. People might not be happy we have to wait until 2009 to take advantage of the TFSA, but at least it gives us lots of time to figure out the pros and cons of each strategy :) I look forward to your post (if one is forthcoming) about low income earners and the TFSA vs RRSP for retirement saving. This is something I’m still trying to get my head around and the more info I can soak up the better. People might not be happy we have to wait until 2009 to take advantage of the TFSA, but at least it gives us lots of time to figure out the pros and cons of each strategy :)

]]> By: Four Pillars http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4196 Four Pillars Mon, 03 Mar 2008 22:19:32 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4196 Hi David, as I understand it there is a flat percentage (25%?) of with holding tax in that case. Depending on the situation, that might work out better. As for the cpp - I believe you can collect them if you are outside the country but if you move away then you might lose them. Obviously if you are planning such a move then please consult a professional (or at least someone who actually knows what they are talking about). Hi David, as I understand it there is a flat percentage (25%?) of with holding tax in that case. Depending on the situation, that might work out better.

As for the cpp – I believe you can collect them if you are outside the country but if you move away then you might lose them.

Obviously if you are planning such a move then please consult a professional (or at least someone who actually knows what they are talking about).

]]> By: David http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4193 David Mon, 03 Mar 2008 20:38:41 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4193 What happens if you decide to leave Canada upon retirement? Is it possible to withdraw funds from an RRSP at a lower tax rate as a non-resident? Also, as a non-resident, would you lose access to CPP benefits? What happens if you decide to leave Canada upon retirement? Is it possible to withdraw funds from an RRSP at a lower tax rate as a non-resident?

Also, as a non-resident, would you lose access to CPP benefits?

]]> By: Four Pillars http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4188 Four Pillars Mon, 03 Mar 2008 16:37:36 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4188 Nobleea - that's something that I've seen debated quite a bit. In my opinion, rrsp contributions are always optional - ie you make them because you want to make withdrawals in the future. You can control the timing and the amount of the contributions and withdrawals (except for the rrif minimum). A defined pension benefit isn't really optional in most cases and I would argue that neither is CPP or OAS, so the way I look at it (rightly or wrongly) is that you should look at the non-optional income sources as the base pay and everything else goes on top since you have more control over the latter. The "extra" income would include income from rrsps, non-registered investments, real estate, business income, part time job income etc. As an example if you look at a teacher in Ontario who has a very good pension plan. Assuming they are going to work long enough to qualify for a pension then they have to assume that they will get the pension as income, some CPP and some OAS (if it's still there). For them to make the decision during their working years to contribute to rrsps implies to me that they are adding rrsps to their future income streams which in my mind makes it the "last" income which gets taxed at the marginal rate. I'm sure there are lots of real life examples where it's not as clear which is the "last income". The real issue is planning - there's nothing wrong with working hard and saving a lot of money but sometimes you have to take a look at the end goal and make sure you are not screwing things up. As Preet said in his book - if you have "too" much money in your rrsp then STOP WORKING! Mike Nobleea – that’s something that I’ve seen debated quite a bit.

In my opinion, rrsp contributions are always optional – ie you make them because you want to make withdrawals in the future. You can control the timing and the amount of the contributions and withdrawals (except for the rrif minimum).

A defined pension benefit isn’t really optional in most cases and I would argue that neither is CPP or OAS, so the way I look at it (rightly or wrongly) is that you should look at the non-optional income sources as the base pay and everything else goes on top since you have more control over the latter.

The “extra” income would include income from rrsps, non-registered investments, real estate, business income, part time job income etc.

As an example if you look at a teacher in Ontario who has a very good pension plan. Assuming they are going to work long enough to qualify for a pension then they have to assume that they will get the pension as income, some CPP and some OAS (if it’s still there). For them to make the decision during their working years to contribute to rrsps implies to me that they are adding rrsps to their future income streams which in my mind makes it the “last” income which gets taxed at the marginal rate.

I’m sure there are lots of real life examples where it’s not as clear which is the “last income”.

The real issue is planning – there’s nothing wrong with working hard and saving a lot of money but sometimes you have to take a look at the end goal and make sure you are not screwing things up. As Preet said in his book – if you have “too” much money in your rrsp then STOP WORKING!

Mike

]]> By: Nobleea http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/comment-page-1/#comment-4186 Nobleea Mon, 03 Mar 2008 16:01:12 +0000 http://www.four-pillars.ca/2008/03/03/is-the-rrsp-still-worthwhile/#comment-4186 "What if you make a lot of money from your other income sources? In that case, the taxes due on the rrsp withdrawal might just end up being your marginal rate." But, you are obligated to withdraw a certain amount of money from your RRIF every year. You are not obligated to work or have income from other sources. So are you really paying the marginal rate on your RRIF withdrawals? Why not flip it around and say you're paying marginal rate on the other income sources? “What if you make a lot of money from your other income sources? In that case, the taxes due on the rrsp withdrawal might just end up being your marginal rate.”

But, you are obligated to withdraw a certain amount of money from your RRIF every year. You are not obligated to work or have income from other sources. So are you really paying the marginal rate on your RRIF withdrawals? Why not flip it around and say you’re paying marginal rate on the other income sources?

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