# Imminent retirement questions



## jman123 (Jan 28, 2015)

Greetings,

I'm a 63 year old male residing in Quebec with a 61 year old wife living in a paid up home, no debts. I would like to retire within the year. No pension at work. 

I collect the QPP ($10K per year), my wife does not. 
I have a LIRA and an RRSP worth together about $525K, my wife has a spousal RRSP and regular RRSP worth together about $330K. So a total registered amount of about $855K. 

For my TFSA , I have about $43K, my wife $29K for a total of $72K of which $25K is in cash (People's Trust and Tangerine).

Net worth (excluding house) is $925K.

My wife still works but she made last year after taxes about $12K. If she retired or lost her job (a possibility this year) she would collect about $6K/year from her pension
and QPP.

Last year my expenses were approximately $40K but we did have a large dental bill of about $6K (after taxes) for the year. 

Most of the registered money is invested in Fidelity mutual funds.

I was thinking of using my TFSA's to reduce on income tax until we both crossed the 65 year mark at which point we would have a minimum of $27K/year from the QPP and OAS.
Maybe, as well during that time, I would create a small RIF in order to take advantage of the Pension Income Tax credit?

Would like to have a net income of at least $40K/year probably more ($50K?) to cover maybe unforesoon expenses and/or travel. 

Do I have enough to retire? 

What would be the correct strategy to go about it?

Is it too simplistic to say a withdrawal rate of 4% per year? Is that too high? At $925K that would be $37K and with my $10K from my 
QPP would be about a minimum of $47K before taxes. Then with my wife making either $6K/year (not working) or $12K/year (working) it would be $53K - $59K before taxes. 
When I turned 65 I would have another $6K/year from the OAS and a year after that another $6K/year for her from the OAS (plus $6K from her QPP and pension)

So many possibilities. 

Your thoughts?

Thanks


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## Russ (Mar 15, 2010)

I would say you are in pretty good shape to retire in the near future. I'm not a big fan of the withdrawal rate approach. I think you would feel better with a more sophisticated analysis that includes income tax effects. A member of this forum, Steve41, has an excellent tool for this and the price is very reasonable. I have never met him and do not benefit from promoting his product in any way, but I have seen the output from his software and it looks very thorough to me. Check out his website here:

http://www.fimetrics.com/

You can also get some great advice from many of the regulars on this forum about improving your investment returns by avoiding mutual funds. I won't comment further on this because I'm still learning, but there are many very knowledgeable people here as you probably already know. 

(By the way, to anyone reading this: I think it is ok to recommend Steve41's software but if I have stepped out of line please let me know.)


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## steve41 (Apr 18, 2009)

I understand that Steve41 is a degenerate wastrel, but his program is OK.


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## My Own Advisor (Sep 24, 2012)

FWIW, I 'm a big fan of this calculator:
http://www.taxtips.ca/calculators/rrsp-rrif/rrsp-rrif-withdrawal-calculator.htm

Steve's is very good as well.

Anyhow, based on what's listed above, with no debt and almost $1M in the bank you're in good shape.

I would consider the following:
1. Withdraw about 4-5% from RRSP before OAS kicks in x2 payments. That will add another $12k per year you do not have now.
2. Keep your TFSA intact "until the end". Move any excess money, not spent, from RRSP to TFSA.
3. Put more of your money into income producing assets such as dividend ETFs - to keep your capital intact inside LIRA and RRSP. 

$500k yielding 4% (eg., ZDV) would churn out $20k per year and you wouldn't touch much capital.

That's a simplistic view I know but a few possibilities for sure. You're in good shape.


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## steve41 (Apr 18, 2009)

I did a quick run and came up with a combined ATI of $65K with both dying broke on hubby's 97th bday.


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## jman123 (Jan 28, 2015)

What does ATI mean? (After Tax Income?)


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## jman123 (Jan 28, 2015)

I'm not sure how you got the $12k per year. 

I was thinking of using my TFSAs so that I would have very little taxable income if I used that to supplement my income before touching my RRSPs.

My objective is to have approximately $50K net income in retirement year 1 and with me making only $10K per year and with my wife making about $17K (all before taxes) I'm trying to make up the difference using mostly through the TFSAs without paying too much tax (as opposed to using my RRSPs). 

I thought using a combination of large amount in my TFSAs and a smaller amount from my RRSPs would reduce the taxes I need to pay but maybe it doesn't make a difference? 

When is the best time to start using TFSA's?


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## steve41 (Apr 18, 2009)

Let me know and I will post the plan.


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## jman123 (Jan 28, 2015)

Yes, please post the plan. Thank you


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## steve41 (Apr 18, 2009)

OK you must check that I have the basics/numbers correct....

http://www.fimetrics.com/mrs-imminent.pdf

http://www.fimetrics.com/mr-imminent.pdf

Steve41


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## jman123 (Jan 28, 2015)

Hi Steve,
Thanks for the info. Chewing it over. I noticed that you have TFSA payments of $2,926 starting at age 66. Can you explain how this was derived? Then there are those 
non-Reg in/out that is a bit of mystery to me. Will work on it some more tomorrow.


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## steve41 (Apr 18, 2009)

The TFSA pmts were started at an arbitrary age.... they can be changed. The non-reg in/out amts are a consequence of the 'needs-driven' math. The program starts with an ATI (after-tax) target and determines a schedule of pmts (in, out and between the rsp/non rsp capital pools) which exactly meets that ATI.


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