# Advice for future please ?



## diharv (Apr 19, 2011)

Hello all
I have a two part question . The first one I hope can be answered by the CPP Expert Dogger 1953 or anyone else.
I am 49 years old and a health care professional with a PC. I have been drawing a salary from my PC since age 26 and making max CPP contributions since age 26. I plan to work until age 55 and continue to make max contributions each year until then. I was wondering what my approx CPP payout will be if I stop making contributions at 55 but delay taking CPP until age 65 or I imagine by then the age to begin collection CPP without penalty will likely be higher by that time some 16 years from now.
The second part of my question involves bridging the time from age 55 to 65 or beyond. Right now between my wifes RSP (spousal) and mine we have 500k split down the middle. My PC at this time has approx 1.4 m in various investments which I eventually will take out in dividends. I am sole shareholder so only I can receive the dividends. My question is for the 10+ years bridging peroid from age 55 to 65 or 67 does it make more sense to deplete our RSPs and then take out dividends and CPP after age 65 or leave the RSP untouched until after age 65 and live off of dividends until then ? Will this result in a tax bomb as Garth Turner calls RSPs ? I realize that I am giving quite general info but I was just looking for an idea as to the general best strategy to follow. 
Thank you all in advance.


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## Dogger1953 (Dec 14, 2012)

diharv - The unknown right now is what your earnings were between age 18 and 26. The 17% general dropout will allow you not to count 8 of those 10 years of zero earnings from age 55 to 65, but that means that the other 39 years of your contributory period will count in calculating your "average lifetime earnings" for CPP purposes.

From what you've said, you will have at least 29 or 30 years of max earnings (let's say 30) from age 26 to 55. Those earnings alone will generate an age-65 CPP retirement $798.72 in 2014 dollars (calculated as 30/39ths of the 2014 max of $1,038.33). 

If you figure out how many max-equivalents you had from age 18 to 26, just add those to the 29 or 30 years that you will have between age 26 and 55, divide by 39 and multiply by $1,038.33 and you will have your answer.


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## Ponderling (Mar 1, 2013)

To the second part of your answer, not an expert on the subject, but a person in a similar place in time. I am 48, and am aiming to retire at 55, or sooner. 

The tax our sizable RRSP's will cost us (800k presently, 570 me, balance her) if I wait until 65 to start drawing on it, as well as taking CPP income at 65 is gonna be a killer. 
Our portfolio plus house sits at 1.4M now, with about 60K more new money going in every year.

My plan is to retire once kids are of to school, or maybe a bit sooner if there are some extra good years of returns between then and now. Draw down my RRSP to a level to keep tax low for the years before my wife wants to retire. 

Live cheap ( her desire to travel is the pricier side of a both retired future) and take the RRSP funds at minimally taxed levels and build up my TFSA'a every year I can, take any surplus and what she brings home abouve living costs and continue to buy stable dividend paying canadian stocks in a non regisitered account.

Then both retire and see what makes the most sense, whether to melt more RRSP, or start drawing the CCP and just grimace and pay everyman tax rates. 
Maybe by then I won't even be able to draw CPP til I am 70 without really getting whacked for early withdrawls.

Spend the time to get RRIFmetric going to do a run by yourself. The developer is one of the guys on this site.


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## HomeChef (Jan 14, 2014)

*Retirement savings options with a PC*

I read your post with interest diharv. I am also a HCP with a PC but I’m just starting out (31 years old) and I’d appreciate any advice you or others could give on what you may have done different or comments about some of the decisions I have made/am making re: retirement planning.
I have chosen to pay myself in dividends from the corp rather than taking a salary. This means that I am not contributing to CPP nor accumulating any further RRSP room. I am maxing out my TFSAs and will be using these for retirement savings only. The bulk of my retirement income will come from the corp. Money saved in the corp can also be dividended to my spouse (currently not doing this as they are in a high-ish tax bracket and we don’t need the extra income right now) and will also be used as a vehicle for children’s education (kids are shareholders and can receive dividends after age 18). Not sure if more details would be helpful but I am interested in your feedback on this overall picture.
Looking back would you have done things differently for yourself? What do you think of my plan (re: no CPP, no RRSP room, etc.)? Any advice from someone who is 18 years ahead of where I am? Thanks!


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## diharv (Apr 19, 2011)

HomeChef said:


> I read your post with interest diharv. I am also a HCP with a PC but I’m just starting out (31 years old) and I’d appreciate any advice you or others could give on what you may have done different or comments about some of the decisions I have made/am making re: retirement planning.
> I have chosen to pay myself in dividends from the corp rather than taking a salary. This means that I am not contributing to CPP nor accumulating any further RRSP room. I am maxing out my TFSAs and will be using these for retirement savings only. The bulk of my retirement income will come from the corp. Money saved in the corp can also be dividended to my spouse (currently not doing this as they are in a high-ish tax bracket and we don’t need the extra income right now) and will also be used as a vehicle for children’s education (kids are shareholders and can receive dividends after age 18). Not sure if more details would be helpful but I am interested in your feedback on this overall picture.
> Looking back would you have done things differently for yourself? What do you think of my plan (re: no CPP, no RRSP room, etc.)? Any advice from someone who is 18 years ahead of where I am? Thanks!


This looks like a plan that I would like to have considered if I knew more when I was starting out. You see , when I started out buying a practice 20 years ago , I was single so I bought an existing practice , assets sale and incorporated. Since I had no moey and only debt I could only take a salary as there was no money left in the corp at the end of the year as I wanted to burn the loan ASAP.Then later I got married , built a house , had kids ,paid off everything and only in the last 14 years have been able to save . Wife and I both have RSPs and she has her TFSA maxed but the bulk of our cash is in the corp. I had explored the option of restructuring by way of setting up a holding co and trusts etc to get my family involved but I did not do it . Which may have been a good thing because I was born in the uS and that would have made coming into compliance with my US tax filing "obligations" alot more complex. It is already complex enough with having a PC which is "foreign" in the eyes of ugly Uncle Sam.This is also why I have nothing in my TFSA right now.
My strategy is to make enough salary to have max cpp until I stop working and then draw it down between the both of us until it is gone and then take dividends from the corp which I guess will have benn converted to a holding company I guess of some sort. Won't likely take CPP until can get max without penalty. So this is my plan unless someone points out a better way. The dilema is which is better ? Let RSPS grow tax free until 65 or later and then likely pay alot of tax on withdrawl or let the PC investments grow and pay tax all along the way on the interest and dividends etc.
homechef , your plan looks sound. You probably had alot of advice when setting up your corp structure so I imagine what you are doing right now was advised by those who know better than us mere HCPs. You are fortunate to have set it up right from the beginning and if you are not a uS citizen living in Canada you are most fortunate indeed!Once I am out of the US system I will max out the TFSAs as you are doing. These are the best things to come from the govt in many years so be sure to max them out between you and your wife. They are a more than adequate replacement for the RSPs.


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