# Left vs Right vs NDP re TFSA limit



## Pano (Oct 16, 2012)

How will the election results affect TFSA limits?

Trudeau says he'll bring it back to 5500$. I'm assuming Conservatives will remain status quo. What about NDP?

Curious as to thoughts?


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## Spidey (May 11, 2009)

I don't think the NDP has a stated position but they are highly critical of the new limits. I think it is the realm of possibility that they wipe it out altogether.


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## OnlyMyOpinion (Sep 1, 2013)

The NDP would eliminate the recent increase. Mansbridge called it $5,000 which is incorrect, it was $5,500. Neither Trudeau or Mulcair corrected him. Maybe the TSFA is chump change when they have their pensions to look forward to.

MANSBRIDGE: TFSAs, THE TAX FREE SAVING ACCOUNT.
MULCAIR: The most recent increase in the last budget we would eliminate.
MANSBRIDGE: SO YOU WOULD KEEP IT $5,000 – NOT GO TO $10,000.
MULCAIR: Exactly.


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## sags (May 15, 2010)

Edited for new information :

The questions have been asked and the summary is at the linked website.

The synopsis is :

The Liberals will roll the $10,000 back to $5500 and keep everything else the same and add indexing the limit to inflation.

The NDP will roll the $10,000 back to $5500 but look into the other aspects of the program regarding claw backs, limits and indexing.

The PC provided background on the TFSA but didn't answer the questions directly.

If a person is concerned about having the TFSA in the future, it would appear only the Liberals have committed to that albeit at the $5500 level plus indexing.

The NDP and PC.............aren't promising anything beyond this year.

http://business.financialpost.com/p...ount-and-the-federal-election?__lsa=d7de-9ffd


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## SpendLessEarnMore (Aug 7, 2013)

so if you maxed out your TFSA how will they roll back that extra $4500? Force banks to withdraw $4500 back into the customer's chequing account if they have one?


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## Guban (Jul 5, 2011)

Hopefully they will set a limit of only $1,000 for those of us that put in $10k. $5.5k (limit for the new year minus) $4.5k (amount over). This would make transactions much easier, and not do nasty things like force sales of stocks at a loss.

Or they could just forgive the extra $4,500 put in and just let things grow using the new, lower, limits. Hard to see this happening, however, as this would set up two different groups of TFSA owners.


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## My Own Advisor (Sep 24, 2012)

I think they would roll it back for a future calendar year to be determined. i.e., as of January 2016 or 2017, the annual contribution limit is X ($5,500 per account holder). Nothing retroactive. Too messy.

I really don't want this to happen though.... :upset:


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## Westerncanada (Nov 11, 2013)

My Own Advisor said:


> I think they would roll it back for a future calendar year to be determined. i.e., as of January 2016 or 2017, the annual contribution limit is X ($5,500 per account holder). Nothing retroactive. Too messy.
> 
> I really don't want this to happen though.... :upset:


It really makes me wonder if they genuinely feel scaling it back is the right thing or if politically they just want to oppose whatever Harper is putting through. 

How on earth would anyone support lowering this from a voters perspective?


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## OurBigFatWallet (Jan 20, 2014)

From what I understand any changes to the annual limit wouldn't be retroactive, likely because it would be an administrative nightmare. But as MOA mentioned I could see them changing the limit effective January 1 2016 (or 2017) to the new lower amount. I just hope they dont eventually eliminate the TFSA altogether in the distant future


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## My Own Advisor (Sep 24, 2012)

I suspect this is trying to stick it to Harper, but I'm not a fan of this Lib or NDP move, so it might actually change how I vote.


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## avrex (Nov 14, 2010)

I read somewhere, that there wouldn't be enough time after the election for the NDP/Lib to change this for Jan 2016. It will have to wait until Jan 2017 to roll it back to $5500.

So make sure you save up your $10,000 for Jan 1, 2016.


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## cashinstinct (Apr 4, 2009)

i think it's the "anti-rich" mentality. Many people cannot imagine being able to save $10,000 a year, so they find it unfair.

Someone that thinks he/she can't reach $5,500 a year could support that others should not be allowed to have $10,000 tax free.


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## gibor365 (Apr 1, 2011)

Just vote for Harper and TFSA , as well as income split, will be intact!


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## none (Jan 15, 2013)

From an individual investor standpoint the TFSA increase is such chump change. 5500 vs 10000 - who really cares. There's a boat load of RRSP room plus canadian is taxed so favourably for most of investors it doesn't really help much. That's why it has been shown over and over again that the TFSA disproportionally helps the wealthy.

Add on the extra bit where a family of 4 can use the TFSA room of their children and yikes.

A bit of TFSA room isn't even on my radar as something that would change my vote. I'm not that cheap to buy.


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## AltaRed (Jun 8, 2009)

I recall Mulcair saying in the Mansbridge interview that 'the NDP will let the Harper fiscal year run its course'. That means no retroactive change to 2015 and it means no NDP budget until Jan or Feb for the fiscal year starting Apr 1.

They may well have to telegraph something in advance to 'prevent' a 2016 contribution limit of $10k. I think one has to look up the wording of what the Cons passed when they made it $10k to see if it automatically continues on autopilot unless something is done to change it. There will be tons of discussion on this in Nov and Dec if either the Libs or NDP forms the gov't.


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## OnlyMyOpinion (Sep 1, 2013)

none said:


> From an individual investor standpoint the TFSA increase is such chump change...


I don't follow.
The maximum you could shelter was $30,430 in 2015 ($5,500 TSFA plus $24,930 RRSP max). The $4,500 of additional TSFA contribution room represents an additional 15% of savings you can shelter - not really chump change. And if your RRSP limit is lower then it represents an even larger % increase in sheltering potential.

If a family has the ability to gift money so that their >18 year old children can save in a TSFA, for their education, or their first house, etc. and reduce their need to go into debt - isn't that supposed to be a good thing? Isn't that a reasonable use for that 'wealth'? All we read about now is the amount of indebtedness Canadians face and how bad it is.

Are we supposed to believe that we would be better off leaving more of our earnings (reduced TSFA, increased taxes) with the government to spend in their inefficient ways and on their pet programs or latest vote-getting promises?


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## none (Jan 15, 2013)

Percentages are misleading in that context.

1) Basically an extra 4.5K in TFSA (if you're talking Canadian equities) is a savings of 4500 * 0.07 * 0.2 = $63 per year. Maybe that's a big deal for some but I give that much biweekly to charity so I don't really care.

2) Education is covered by the RESP program. There is also the opportunity cost. These monies are removed from somewhere. Veteran benefits, roads, infrastructure, schools, envrinomental monitoring, foreign aid etc. Those are more important to me than people buying more cheap crap from china.

3) Taxes are not all evil. My taxes buy civilization as they say. In some ways the government is far more efficient than private. I don't know about you but I don't really want privatized health care (I actually do on a personal level b/c it's better because I have $$$), police, or Army. That's crazy


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## cashinstinct (Apr 4, 2009)

An unsolved question: if people are able to fill TFSA at $5,500... does having $10,000 limit will make them save more than they would have otherwise?


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## My Own Advisor (Sep 24, 2012)

I can only speak for myself, but yes, having the (extra) contribution room is an incentive to save.


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## Soon Forget (Mar 25, 2014)

I'm with MOA on this one. Although if the limit is lowered again it'll be good news for mortgage reduction because the money will be going there instead.


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## Eder (Feb 16, 2011)

none said:


> From an individual investor standpoint the TFSA increase is such chump change. 5500 vs 10000 - who really cares. There's a boat load of RRSP room plus canadian is taxed so favourably for most of investors it doesn't really help much. That's why it has been shown over and over again that the TFSA disproportionally helps the wealthy.


Sorry but you aren't thinking things thru...I wont elaborate much but key on the fact RRSP is money no tax has been paid on while TSFA is taxed money....in the case of affluent people they paid almost 45% tax...in the case of our youth they may have paid 10% tax...who benefits more? Also the contribution space is accumulative, so our youth that are pretty broke today can use that room in 15 years...none of it at any cost to social programs or infrastructure.


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## none (Jan 15, 2013)

I understand how the programs work and yes you are correct that low income people can benefit from a TFSA. However, high income people can also use (and abuse) the program by using the room of their children, for example. Sort of oddly the RRSP is still far superior for high income people. It does, however, REALLY benefit those that make so much that their RRSPs are maxed out, their Canadian allocation of investments are maxed out AND they want yet even more tax sheltered investment room.

The way it is set up now - all those hitting 18 now will never have to pay capital gains on investment b/c of RRSP and TFSAs. Is that fair? I don't think so b/c investment income is largely earned by wealthy individuals.


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## OnlyMyOpinion (Sep 1, 2013)

none said:


> ...all those hitting 18 now will never have to pay capital gains on investment b/c of RRSP ... Is that fair? I don't think so b/c investment income is largely earned by wealthy individuals.


You are right - they will not pay capital gains (tax) when they begin to draw down their RRSP - but that is because the capital gains tax advantage is lost when earned within an RRSP. It is taxed in a less advantaged manner like any other income on withdrawl. 
Investment income is earned by anyone saving and investing for their retirement or any other future goal - not just "wealthy individuals".
This might be a thread you want to stop digging a hole with - it just keeps getting deeper.


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## GPM (Jan 23, 2015)

none said:


> I understand how the programs work and yes you are correct that low income people can benefit from a TFSA. However, high income people can also use (and abuse) the program by using the room of their children, for example. Sort of oddly the RRSP is still far superior for high income people. It does, however, REALLY benefit those that make so much that their RRSPs are maxed out, their Canadian allocation of investments are maxed out AND they want yet even more tax sheltered investment room.
> 
> The way it is set up now - all those hitting 18 now will never have to pay capital gains on investment b/c of RRSP and TFSAs. Is that fair? I don't think so b/c investment income is largely earned by wealthy individuals.


To be honest I still think the tfsa is superior to RRSP's for low income earners. I've seen the math and yeh, they work out about the same. Just like TFSA because the actual value of the money inside is equal to outside , and anyone can invest the maximum. However, the RRSP being superior for high income people? Likely. But I know of few who use it. A personal holding corp is superior in flexibility, you pay less tax, and don't get double dinged on CPP contribution - employer and personal. To be extremely blunt, for the wealthier people, a $5500 or $10,000 TFSA is just a p$ss in the bucket. It's an irrelevant or nearly irrelevant tool for them. The corporations can be abused too take money out to pay school fees, or just pay the 18 y/o children and have it gifted back. The kiddie advantages are gone but not for 18 y/o +


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## none (Jan 15, 2013)

GPM said:


> To be extremely blunt, for the wealthier people, a $5500 or $10,000 TFSA is just a p$ss in the bucket. It's an irrelevant or nearly irrelevant tool for them. The corporations can be abused too take money out to pay school fees, or just pay the 18 y/o children and have it gifted back. The kiddie advantages are gone but not for 18 y/o +


And that's the exact point. Why give a big tax break to people that don't even value it? That's practically the hallmark of bad policy.


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## GPM (Jan 23, 2015)

none said:


> And that's the exact point. Why give a big tax break to people that don't even value it? That's practically the hallmark of bad policy.


Yep. Unfortunately I'm not quite in that position, (fly with the Eagles and all - good mentors) but for most of my career it was non existent. As an indexer, the taxes saved are minimal. Therefore, it's a non election issue for me, and irrelevant if it was removed. Now replacing the RRSP (same limit structure) with it and grandfathering the RRSP, I could go for that.


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## sags (May 15, 2010)

It remains to be seen, but I think Harper is hiding the true intentions on the TFSA.

They refuse to answer direct questions on the future of the TFSA.

Remember income trusts and _tax leakage_...........We wont touch them, Harper said before the election.............and then eliminated them after he was elected.


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## Moneytoo (Mar 26, 2014)

Man I should stop reading this forum before I become certifiably paranoic...


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## GPM (Jan 23, 2015)

sags said:


> It remains to be seen, but I think Harper is hiding the true intentions on the TFSA.
> 
> They refuse to answer direct questions on the future of the TFSA.
> 
> Remember income trusts and _tax leakage_...........We wont touch them, Harper said before the election.............and then eliminated them after he was elected.


I sure do. Lost a lot of money. I'm sure there was some very well informed trading by the cabinet in the few days before their final demise. Imagine having companies pay out most of their income to their shareholders. Inconceivable.


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## lost in space (Aug 31, 2015)

*marginoferror*



none said:


> From an individual investor standpoint the TFSA increase is such chump change. 5500 vs 10000 - who really cares. There's a boat load of RRSP room plus canadian is taxed so favourably for most of investors it doesn't really help much. That's why it has been shown over and over again that the TFSA disproportionally helps the wealthy.


Just noticed that you made a typo, that last line should read ....that the TFSA disproportionally helps the FRUGAL. If you're not frugal and careful with you money it won't matter how much you earn

Secondly for the wealth this quote from Garth sums it up

*Most people, of course, simply don’t understand how they’re taxed or what to do to minimize the impact. They also don’t realize how the tax system is skewed to ensuring the rich stay that way.*


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## lost in space (Aug 31, 2015)

to add to my previous thought (note all my examples are US based as I don't know of any CDN examples) but do you really think a hedge fund manager cares whether the TFSA limit is indexed to inflation or not. What matters to him is the carried interest rule, that is, to him, worth 100s of millions of dollars!

US blogger Root of Good illustrates how the TFSA helps the frugal

Root of Good How I made a six figure income and paid not income tax


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## james4beach (Nov 15, 2012)

As much as I like the TFSA, this is nowhere close to my primary election issues. I would sooner vote NDP for anti-war and anti-state-surveillance, even if it means losing the TFSA.


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## james4beach (Nov 15, 2012)

lost in space said:


> US blogger Root of Good illustrates how the TFSA helps the frugal
> 
> Root of Good How I made a six figure income and paid not income tax


I don't see how that's relevant at all. His strategy is mainly based on tax deferral. Almost everything he's using (401k, 457, HSA) are tax deferral mechanisms, akin to RRSP.

Thus he has not reduced his tax. He's just deferred it. In effect, he's making an incredibly large bet that future taxes will not be higher. I think that's a dangerous bet, considering that the US is nearly bankrupt and will inevitably have to raise future taxes.

Leaving aside whether deferral is a flawed idea... the TFSA does not let you defer tax anyway. You can't do anything parallel to what he wrote in that blog post using the TFSA. Am I missing something?


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## lost in space (Aug 31, 2015)

james4beach said:


> I don't see how that's relevant at all. His strategy is mainly based on tax deferral. Almost everything he's using (401k, 457, HSA) are tax deferral mechanisms, akin to RRSP.
> 
> Thus he has not reduced his tax. He's just deferred it. In effect, he's making an incredibly large bet that future taxes will not be higher. I think that's a dangerous bet, considering that the US is nearly bankrupt and will inevitably have to raise future taxes.
> 
> Leaving aside whether deferral is a flawed idea... the TFSA does not let you defer tax anyway. You can't do anything parallel to what he wrote in that blog post using the TFSA. Am I missing something?


True, but my point was that things like TFSAs benefit the furgal not the wealthy

Anyways Garth did a much better job of it than I did

Garth on TFSA


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## none (Jan 15, 2013)

Are you kidding ? That post was transparent garbage. Just go through the comment section and see people tear apart his logic. That fat dude sucks.


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## CPA Candidate (Dec 15, 2013)

james4beach said:


> As much as I like the TFSA, this is nowhere close to my primary election issues. I would sooner vote NDP for anti-war and anti-state-surveillance, even if it means losing the TFSA.


You voted for cowardice in the face of pure evil.


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## jollybear (Jun 28, 2015)

CPA Candidate said:


> You voted for cowardice in the face of pure evil.


Absolutely agree......the loss of $4500 contribution room in our TFSA is a minor detail in comparison to the effect NDP`s plan to immediately withdraw our military presence in the Middle East would create


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## GPM (Jan 23, 2015)

CPA Candidate said:


> You voted for cowardice in the face of pure evil.


To both of you. Sorry. Nobody can talk about cowardice of others unless their boots are on the ground in combat. Period. Supporting war or "our troops" is Bull S$$t. It makes me sick every time I hear it. If you support the conflict, get your a$$ over their like true Canadians in WW II, because not participating is true cowardice - letting other people do the dirty work for you. I'm all for security of our borders. Middle East wars - let the locals solve it. The U.S. is just their to control the whole area. Supporting the Evil Empire in their oil wars makes me embarrassed to be Canadian. We are useles anyways. How many planes do we have - 1. Heh heh. Only our troops are useful and extremely competent I might add. We have no business there. I have friends who were involved in Aphganistan, Iraq, and Africa (funny the U.S. stopped THEM because it interfered it interfered with their foreign interests, even though they were stabilizing a country). What a waste of time and lives. Doesn't take much research to know why they all have PTSD. Pure evil. Yeh Isis is bad, but the U.S. and Britain are no better. They just don't televise their "evil". Hesus, I hate politics.


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## Eclectic12 (Oct 20, 2010)

none said:


> GPM said:
> 
> 
> > none said:
> ...


Shouldn't being "far superior for high income people" translate into actual use?
After all, one can't argue they don't have the money to make use of it.


Cheers


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## GPM (Jan 23, 2015)

Well intuitively, the RRSP is better for high income employees. Loved it then mostly for ease of use. However, hiding the money in a holding company, and knowing how to take it out is superior for my family now. It's all tax advantaged money when you move it from your regular company. We would pay too much tax to maximize our RRSP's. Pity because I did like them at the time. The holding company is a bit of a pain in the butt compared to RRSP's. I let my accountant handle it!

I should add at one time we took out enough pay from our operating company to max our RRSP's. A new financial plan changed us to maximizing the CPP only, which coincidently matches my wifes new RRSP match, forcing us to contribute - free money. I think we would still max salary for CPP without her RRSP match, but most of my colleagues with no match, just dividend out there income for no CCP payment and lower taxes. Hence they don't contribute to an RRSP and keep all their investments in a hold co.

Sorry if I'm confusing here.


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## mrPPincer (Nov 21, 2011)

GPM said:


> To both of you. Sorry. Nobody can talk about cowardice of others unless their boots are on the ground in combat. Period. Supporting war or "our troops" is Bull S$$t. It makes me sick every time I hear it. If you support the conflict, get your a$$ over their like true Canadians in WW II, because not participating is true cowardice - letting other people do the dirty work for you. I'm all for security of our borders. Middle East wars - let the locals solve it. The U.S. is just their to control the whole area. Supporting the Evil Empire in their oil wars makes me embarrassed to be Canadian. We are useles anyways. How many planes do we have - 1. Heh heh. Only our troops are useful and extremely competent I might add. We have no business there. I have friends who were involved in Aphganistan, Iraq, and Africa (funny the U.S. stopped THEM because it interfered it interfered with their foreign interests, even though they were stabilizing a country). What a waste of time and lives. Doesn't take much research to know why they all have PTSD. Pure evil. Yeh Isis is bad, but the U.S. and Britain are no better. They just don't televise their "evil". Hesus, I hate politics.


+1000 
^this echoed what I was thinking exactly but didn't say, you hit the nail on the head imo, & I couldn't have put it in words any more succinctly than this, so thanks for speaking up GPM


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## GPM (Jan 23, 2015)

mrPPincer said:


> +1000
> ^this echoed what I was thinking exactly but didn't say, you hit the nail on the head imo, & I couldn't have put it in words any more succinctly than this, so thanks for speaking up GPM


I truly appreciate your support! I am not very political, but this is a pet peeve. It looks like it might be time to pack up and hit the trail. I don't think this will be a popular comment or widely held opinion.


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## jollybear (Jun 28, 2015)

GPM said:


> I truly appreciate your support! I am not very political, but this is a pet peeve. It looks like it might be time to pack up and hit the trail. I don't think this will be a popular comment or widely held opinion.


Smart move for everyone.......after all, this is an investing forum


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## ashin1 (Mar 22, 2014)

contribution room aside, TFSA and RRSP are both amazing accounts not just for high income earners but if you understand and utilize them at an early age. To the people who are concerned about how it benefits only the wealth, take that energy you have for rich people hating, and put that towards educating your children or other young members of society the importance and power of compound interest.


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## Eclectic12 (Oct 20, 2010)

GPM said:


> Well intuitively, the RRSP is better for high income employees ...
> However, hiding the money in a holding company, and knowing how to take it out is superior for my family now.


Then I guess in your case, intuition is wrong in your family's case, correct? :biggrin:

The blanket statements are obscuring that there's assumptions that will affect what one does. If it's clearly better in all cases, there shouldn't be any alternatives or "beware of" type scenarios.

You say:



GPM said:


> ... most of my colleagues with no match, just dividend out there income for no CCP payment and lower taxes. Hence they don't contribute to an RRSP and keep all their investments in a hold co.


They clearly think the RRSP is not a good deal for them.
What are they missing that they see the holding company as superior?

Or is it that there's a range of income earners out there, some of whom it is a good deal for and others it is not?

The blanket statements are suggesting one-size fits all where there would be no reason for anyone to do anything else or write an article suggesting anything else.


Cheers


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## mrPPincer (Nov 21, 2011)

From a personal perspective I don't want to see the TFSA limit lowered because my RSP is maxed and most of my investments are in non-registered, so TFSA is a great thing for me,
but getting Harper out is top priority.

If long-term $5.5K indexed is better than 10K fixed, I'm happy with that anyways 

Lowering the HST was nothing but a vote-buying mistake and that should be where the next government should be looking imho.
I've heard most economists and tax experts believe that consumption tax is the way to go compared to earnings tax and I happen to fully agree, problem is most Canadians aren't economists and tax experts, so sometimes it's easier for a government with loose scruples and a short-sighted view to ignore the science and implement bad policy along with some publicly-funded PR in order to garner some easy votes.

Doesn't work forever though, even if they manage to squeek through with a minority this time, long term it's gonna be game over because I think.. I hope..(not sure about the liberals).. that the other parties are done cowtowing to them.


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## HaroldCrump (Jun 10, 2009)

This whole thing about TFSA limits is political posturing.

Basically the logic is - any tax cuts provided by the Harper govt. in last 9 years are bad, benefit the evil "rich people", or the "greedy corporations", etc.
However, all the cuts and sops the Libs/NDP are proposing are good because it benefits the "middle classes".

For instance, the 2% GST cut was bad (despite the fact that it benefits middle & lower income more than the rich), but $15 daycare will be great.
Income splitting is bad because it benefits the rich, but doubling the CCTB is great.
...and so on.

I do not like targeted tax cuts like income splitting, home renovation credit, child activity credit, adult fitness credit, etc. either.
However, we are in a situation where 2 of the 3 main parties are ideologically opposed to lower taxes.
They are betting on vague "infrastructure spending" as the silver bullet to revive the economy.

Anyhow, there is no risk of any retroactive changes to TFSA contribution limits.
However, it is almost guaranteed that if either the NDP or LPC are elected, the limit will be rolled back to $5,500 starting 2016.
The income splitting will be scrapped as well.
It is conceivable that at some point the 2% GST cut from 2006 will be rolled back as well.
In fact, given the spending plans of both parties, the GST may have to go up an additional point to avoid crushing budget deficits.


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## GPM (Jan 23, 2015)

Eclectic12 said:


> Then I guess in your case, intuition is wrong in your family's case, correct? :biggrin:
> 
> The blanket statements are obscuring that there's assumptions that will affect what one does. If it's clearly better in all cases, there shouldn't be any alternatives or "beware of" type scenarios.
> 
> ...


Yep, I'm as clear as mud. I apologize. I'm typing quickly on busses. For high income earners, the RRSP AND TFSA are great. Shelter as much as you can. We did this before we could incorporate. Then we took out maximum wages for our RRSP's and transferred the rest to a holding company. Now the money in our corporations were taxed at corporate rates (18% or 20% - don't quote me, my accountant handles it now it's set up!!!). So the holding company became a great savings tool. Health problems lead me to close my business. It then became advantageous to only match the CPP (I'm a fan of a balanced approach). We pay dividends for the rest of our income and maximize the holding company. In our case it was income splitting. The only problem, is the business pays both the EMPLOYEE CPP AND THE CORPORATE MATCH as well as EI. (Sorry about the capitals - not yelling, but can't italicize). Most of my colleagues detest this and just dividend out wages. They are much wealthier than me. (I like the safety net of CPP and EI). So, in summary, it's not a one size fits all. I think the RRSP and TFSA are generally the way to go. If you can incorporate, it depends on how much you want to pay out. The big idea behind it all is wether the tax savings outweigh the advantages of RRSP's. If you are rich, there must be some more advantages. If I become so, I'll let you know!!! Anyhow, CPA Candidate might have a more clear answer. I'm using advisors. He would be the adviser!

Also, they feel the holding companies flexibility also makes it superior to the RRSP. I know one is VERY adept at real estate and is all in his holdco, bought with tax advantage money. He has no RRSP. He pays his adult children through some kind if trusts. This is territory I'm unfamiliar with.


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## GPM (Jan 23, 2015)

Ashin1, Harold Crump and mrPPincher. You are all correct in your own ways. I, for one , hope the TFSA remains, no matter the form. I fear it may even disappear at some point unfortunately, no matter what party takes over.


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## GPM (Jan 23, 2015)

jollybear said:


> Smart move for everyone.......after all, this is an investing forum


Yes jolly bear I agree. It IS a money forum. I hate talking politics and am more interested in the TFSA's use and future. I apologize for the detailed response! 
Have a good day!
GPM


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## tenoclock (Jan 23, 2015)

Will vote for either NDP or Liberal. Losing TFSA is a small price to pay for losing your freedom and living in an increasingly surveillance state which the Cons want. 

Besides Canada's international reputation as a neutral peacemaker has suffered greatly due to Cons foreign policy.


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## Eclectic12 (Oct 20, 2010)

GPM said:


> Yep, I'm as clear as mud. I apologize.


I'm not sure you are being unclear ... except about my point.

The original statement was pretty much that it was a cut & dried, all the time advantage. The fact that there's discussion about whether to use it or not and people posting that they are avoiding the RRSP after due diligence contradicts this.




GPM said:


> ... in summary, it's not a one size fits all. I think the RRSP and TFSA are generally the way to go ...
> If you are rich, there must be some more advantages ...


The RRSP is the only one I'm questioning the "it's an advantage for everyone". I haven't heard anyone argue that for a high income earner who can max both, that they should avoid a TFSA. :biggrin:


Cheers


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## GPM (Jan 23, 2015)

Eclectic12 said:


> I'm not sure you are being unclear ... except about my point.
> 
> The original statement was pretty much that it was a cut & dried, all the time advantage. The fact that there's discussion about whether to use it or not and people posting that they are avoiding the RRSP after due diligence contradicts this.
> 
> ...


Hmmm. Now I'm not the brightest bulb in the ceiling, so I'm stabbing at this and you can let me know. All the fellows are using the tfsa. You don't need salary to do it. The really loaded fellow, spreads cash around his kids, avoiding tax. I THINK he saves more in tax than investing in an RRSP by using the dividends, and saves double CPP hit and double EI (personal corp so he would pay both on his own salary tecnically). We are the same, with income splitting, so have very little RRSP room. We pay enough salary to max the CPP (I just like the comfort, and my wife receives a RRSP match that equals this amount to take advantage of) and the rest in dividends. However, we pay way less tax which is more than we save with the RRSP. (Now we have a decent, age related amount saved in RRSP's which pleases me). However, the taxes we pay on money left inside are low (corporate tax rate - not fair, but hey, that's how the system works, even at a personal level) , and not removing the money keeps us in low tax bracket. So the companies are tax advantaged with the low corporation tax. The money is just transferred to a holding company for a layer of protection in bankruptcy, but also we can't invest in the company. So as a blanket statement, it's better for us and anyone who can't take full advantage of their corporate savings, and Max an RRSP's as well, (like when we were both able to have companies) to use the just the corporation. For the rich fellow, he's a real estate wonder kid, but I think he could max an RRSP. The others are still working on their corporations. I believe you can save $500,000'at the corporate tax rate inside a personal corp. We aren't near these guys in profit, and I was uncomfortable with the low contribution to RRSP's, so I consulted a different accountant and my old one from before we moved (a big wheel partner at KPMG who took me under his wing at 23 - I think he thought I was going broke for sure!!!). They all agreed that tax minimization trumped the RRSP advantage. Now if someone can max their corporation, or save lots, than I believe the RRSP is next in line. I'm not sure the number is written in stone as we were NOT saving 500,000 in our companies (I wish ), but saved as much as possible in the corp - way more than the RRSP Max, especially when it was stuck at $13,500. At that point we still maxed the RRSP's. However, that was also a $75,000 salary, so the taxes weren't too onerous. Without a personal corporation, RRSP's all the way. I had an accountant, lawyer , and financial advisor that specialized in this sort of thing, set it up years ago. They are much smarter than me, and explained it. It made sense so I did it, but now we concentrate on the business and let our accountant handle the rest. I hope this is what you are looking for. Let me know!

As an aside, I joined the forum since I figured out quickly that insurance and mutual fund salesmen weren't on my side. I recognized several attempts to take advantage, tried a few, and a broker, whom I staid with too long. I finally gave up and went DIY. Plus I have time. Learning a lot, but not necessarily providing any wisdom, even with experience at an ever increasing age

Jeez, I have to quit writing essays.


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## martinv (Apr 30, 2009)

I wish they would go after RRSP's instead. Have never been a great fan of RRSP. As a good saver but modest income, I was always frustrated with the percentage limit which depended on your earned income.
It is much more geared to the high income earners than the TFSA. At least with the TFSA, if you save hard you can contribute as much as the one percent.
In any case, why are the political parties already saying they are going to cut the TFSA and treat capital gains as regular income?
Aren't they supposed to offer us little goodies come election time? Not take things away.
And no, I am not part of the so called wealthy, far, far from it. Not even near Mr. Trudeau's middle class of $150,000.


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## BoringInvestor (Sep 12, 2013)

martinv said:


> I wish they would go after RRSP's instead. Have never been a great fan of RRSP. As a good saver but modest income, I was always frustrated with the percentage limit which depended on your earned income.
> It is much more geared to the high income earners than the TFSA. At least with the TFSA, if you save hard you can contribute as much as the one percent.
> In any case, why are the political parties already saying they are going to cut the TFSA and treat capital gains as regular income?
> Aren't they supposed to offer us little goodies come election time? Not take things away.
> And no, I am not part of the so called wealthy, far, far from it. Not even near Mr. Trudeau's middle class of $150,000.


Because it's a bad social policy - that's why they're against it.


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## Moneytoo (Mar 26, 2014)

"Canadians want opposition parties to keep their hands off the new expanded contribution limits for tax-free savings accounts (TFSAs), according to an online survey."

Two-thirds of Canadians oppose rollback of TFSA limit: poll

Yessss....


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## HaroldCrump (Jun 10, 2009)

^^ I highly doubt people are going to vote based on a party's TFSA position.
Barely 50% people have TFSAs, and most are far below the $5,500 amount even.
People are voting based on other issues, such as middle east involvement, rhetoric around economy, environment, etc.


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## Moneytoo (Mar 26, 2014)

...retirement 

"The strong support in the survey for the higher TFSA contribution limits doesn’t amount to a blanket endorsement of Conservative proposals. An even larger majority – 81 per cent of respondents – liked Liberal and NDP proposals to maintain eligibility for Old Age Security at 65 years, rather than gradually increasing it to 67 as Conservatives plan."


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## GPM (Jan 23, 2015)

I agree, I like the TFSA much better, more transparent, and better for the normal or below guy. If someone can save more than 18% tax advantaged, with a lower income, they should be able too. These are the people "using the system" according to most. Also, the tax advantages of an RRSP contribution decrease rapidly in lower tax brackets. I'm seeing more advisors recommend the TFSA over RRSP's due to this. Also, that's what you have, not the unknown after tax amount. An RRSP looks impressive until you remove 30-50% tax. I totally disagree that TFSA's are only for the rich. They are a great advantage to the average Joe. It bothered me when RRSP's were stuck at $13,500 for years. I couldn't save the 18% I was supposed to need. Now that was not a middle class problem. Just an example. I think the RRSP should be grandfathered and the TFSA amounts adjusted to a min of 10,000 which is more than most need and have a max contribution like the RRSP. 

Anyhow, never saw the idea of increased capital gains tax. That's going to murder my financial plan! Thanks for the info.

I type like a turtle. The above comments came while I was responding:

Money too, it sounds like you don't think they will adjust the TFSA or people just don't care.

Harold Crump, just curious (as you definitely seem very knowledgeable with thousands of posts, especially the ones I've seen)why going after RRSP's is bad social policy? The TFSA is arguably (I don't pretend to be an expert) a better product for the lower income, and the only for the rich argument is possibly backward. These people with, better advice, might be using the TFSA instead (arguable if better again). Expansion of TFSA and grandfathering RRSP are just theoretical and will never happen, I know. I agree people are voting based on other concerns.


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## HaroldCrump (Jun 10, 2009)

GPM said:


> I think the RRSP should be grandfathered and the TFSA amounts adjusted to a min of 10,000 which is more than most need and have a max contribution like the RRSP.


Not at all !
RRSP & TFSA are functionally equivalent only under the scenario where avg tax rate at contribution is = avg tax rate during retirement.
If the tax rate during retirement is lower than avg tax rate during contribution years, the RRSP comes out ahead than the TFSA.
The greater the spread between the two rates, the better the RRSP performs vis-a-vis the TFSA.

Also, do not forget that the fed. govt. has recently relaxed mandatory RRIF withdrawal rules.
It is possible that RRIF rules will continue to be relaxed in the future - more likely under a CPC govt. than Lib/NDP, but let's leave that aside.

Assuming relaxed RRIF withdrawal rules, the RRSP benefits.

It is true that if contribution stays at $10K, the TFSA will become a very significant pillar of the retirement system in the near future.
However, the RRSP is entirely different and has features of its own, which the TFSA does not have.

Lastly, this whole "TFSA benefits only the wealthy" is complete nonsense perpetuated by vested interest groups like the CCPA & Broadbent Institute.
MSM picks up these "reports" and publishes them in newspapers as if they were absolute facts.

The groups that perhaps benefits the most from TFSA via tax arbitrage are the GIS claimants.
That is the exact opposite of "rich" people.
TFSA withdrawals enables a very nice GIS/OAS arbitrage, which is completely ignored by the "evil rich people" crowd.


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## sags (May 15, 2010)

Wouldn't it make more sense though, in the context of saving for retirement.........to just expand the CPP and let people contribute more without the worry about investing ?

Even the people who are investing in a TFSA have most of the money sitting in GICs.


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## sags (May 15, 2010)

I think so many young people today are of the mindset that investing is too difficult, and they would rather just buy a nice home......and they get both a nice place to live and the house will pay for their retirement.

Buying a home is the number 1 "investment" in a lot of people's minds.

It worked in the past, but with home prices rising so quickly to such high levels, I doubt it will work out the same way in the future.


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## HaroldCrump (Jun 10, 2009)

GPM said:


> why going after RRSP's is bad social policy? The TFSA is arguably (I don't pretend to be an expert) a better product for the lower income, and the only for the rich argument is possibly backward. These people with, better advice, might be using the TFSA instead (arguable if better again). Expansion of TFSA and grandfathering RRSP are just theoretical and will never happen, I know.


TFSA is more flexible.
However, purely from a retirement planning perspective, *both TFSA and RRSP are functionally equivalent* if avg tax rates during contribution years is = avg tax rate during retirement.
TFSA is after-tax money compounding tax free.
RRSP is pre-tax money compounding tax free, but taxes payable upon withdrawal (mandatory or voluntary).

Therefore, the RRSP is basically a tax arbitrage vehicle - contribute during high tax years, withdraw during low tax years.

For instance, someone paying an average of 26% taxes during contribution years, with no other retirement income, will easily be in the 15% tax bracket during retirement.
For someone like that, RRSP is a better option than TFSA.

However, the lower you go on the income scale during retirement, the better the TFSA performs because of GIS & OAS arbitrage.
If RRIF withdrawal rules are relaxed significantly in the future, or if a future federal govt. were to accept proposals by groups like CARP & CDH to completely dissolve RRIF withdrawal rules, then it will become possible to take advantage of both programs.
In that case, the RRSP can be used primarily for legacy/estate purposes, while using TFSA for retirement income to maximize GIS and OAS.

All this said, future tax rates and govt. policy related to RRIF, TFSA, OAS etc. are uncertain.
It is entirely possible that the GIS/OAS exemption for TFSA withdraws could be removed by a future govt.
OAS clawbacks can be increased.
OAS age eligibility can be gradually be nudged up to 71, reducing the benefits of tax arbitrage.


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## RBull (Jan 20, 2013)

A primary residence shouldn't be considered an "investment", and it also should not be considered as a plan to pay for retirement. People thinking this way are making a mistake.


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## GPM (Jan 23, 2015)

sags said:


> Wouldn't it make more sense though, in the context of saving for retirement.........to just expand the CPP and let people contribute more without the worry about investing ?
> 
> Even the people who are investing in a TFSA have most of the money sitting in GICs.


I agree with this, especially with lower income people. The investing knowledge isn't there, nor is the interest or time. I think it allows access to low fee investing, and products not available to average people. They also aren't being taken advantage of by advisors. The Saskatchewan Pension Plan is a good example of how people could benefit from increased CPP. It's not exact, but run by managers that are either pension only, or million dollar entrances. The CPP is like a lifetime annuity. The only 2 problems I see are you don't get any money back at death like some annuities, and great resistance from capable investors. A voluntary increase would be great. I would use CPP as an annuity if they increase it, but would want my own investments as well. The SPP is nice because its mandate of pension management at a fee of 1% or less. I think these new private investment ideas from the government are a disaster. They throw everything in the lap of the individual or employer. No better than regular investing, unless they mandate pension managers.

I'm from the "house generation" Rbull. Slow motion train crash. No foresight and no investing. Shocking, when you speak to them about it. Will be even worse with a housing price correction.


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## martinv (Apr 30, 2009)

BoringInvestor said:


> Because it's a bad social policy - that's why they're against it.


So encouraging someone to save for their retirement is bad social policy?
Sorry, don't get that one.
Except that the government loses a certain amount of control and they hate to lose control of any sort.


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## HaroldCrump (Jun 10, 2009)

sags said:


> Wouldn't it make more sense though, in the context of saving for retirement.........to just expand the CPP and let people contribute more


Within reason, yes.
However, programs like TFSA and RRSP are much more flexible compared to CPP.
CPP is actually very rigid.

For retirement income to increase appreciable, we'd need to raise contribution limits significantly.
Minor tweaks at the margin is not going to make any difference.
However, if you did that (i.e. significant increase to contribution), you will essentially be shifting savings from other purposes (mortgage payoff, kids' education, home buying, TFSA/RRSP, etc.) into a fixed & inflexible form of retirement (i.e. CPP).

There is no unlimited money in household budgets to meet all savings' needs.

For this reason, I have always said that any significant increase to CPP must be accompanied by fairly significant tax cuts.
I explained this in greater detail under the Retirement thread.

We as a society have to decide how important retirement guarantees are.
Is it so important that we need to starve other avenues, such as home buying, kids' education, mortgage payoff, etc. and redirect those savings into a fixed form of retirement.

We have to decide whether we have a true "retirement crisis" or not, regardless of political rhetoric.
And if we do have a crisis, whether the solution involves a shift to a fixed, inflexible model (CPP) or expansion of flexible models (TFSA expansion, relax RRIF rules, etc.), or a combination thereof.

We have to keep in mind that a big move towards inflexible model (CPP) takes away a lot of individual freedom because it puts us at the mercy of govt of the day.
Those that have been in the workforce since the 1990s have now gone through 2 waves of changes to CPP rules.
Each change has increased contributions and/or reduced benefits one way or another.
The most recent changes (i.e. increasing early CPP penalties) are effectively a reduction of total lifetime benefits.

This type of tweaking, while great from the aggregate actuarial perspective, at an individual levels becomes a gamble on when one chooses to claim CPP vis-a-vis when one passes away.

The other impact of expanded CPP we must not ignore is the loss of legacy/estate value.
RRSP and TFSA are part of one's estate, unlike CPP.

A massively expanded CPP, while it may provide guaranteed income in retirement comes at the cost of flexibility and independence.
And the guarantee is not a true guarantee either (for those early or half-way through their working careers), since the rules can be changed in future.


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## sags (May 15, 2010)

Interesting discussion.............full of twists and turns.

We best figure out something and soon or millions of Canadians are going to retire and learn living on CPP and OAS/GIS really sucks.

My brother and I are the only ones of our family with DB pensions. I have no idea how the other siblings are going to ever retire..........and neither do they.

We have had some interesting discussions around the dinner table, with them asking what they will receive in benefits when they retire. 

When they are told the numbers.......they are shocked.

"How are we going to live on that"............they ask. "Very frugally"...........is about all I can tell them.


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## lonewolf (Jun 12, 2012)

The TFSA limit is not the important issue. It does not matter how big the limit is if the banks bring the whole system down through transactional banking. (bundling up loans then selling loans to 3rd parties which almost brought the system down in the U.S). Before topping in 2007 the pro bank for profit screw the public conservatives wanted the banks to be able to operate like the U.S banks, the other parties stopped them. Relationship banking force the banks to make good loans. The conservatives are on the side of the banks & want the TFSA limit high so the banks can steal more money.


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## tygrus (Mar 13, 2012)

I ride the pines between left and right (doesn't mean I will vote liberal though), but Harper has this right. If the masses are not given some tax advantageous tool to build some sort of retirement plan, the whole country is going to be doomed cause SPP and OAS aint' gonna cut it in 20 years.


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## HaroldCrump (Jun 10, 2009)

sags said:


> I have no idea how the other siblings are going to ever retire..........and neither do they.


If we measure retirement security as the % of working income replaced, then they should take into account OAS & CPP first.
For the vast majority of low to middle income earners, OAS + CPP provides a respectable (not generous, but respectable) income replacement %.
Full CPP is about 25% income replacement of avg YMPE during their working years.
Add in OAS, age credits and you are in the 1/3rd income replacement range.

If they have non registered savings, those can be used to buy annuities for more guaranteed retirement income.

I am not saying it will be a generous retirement, or even comfortable, but it won't be poor either.

The last option is to leverage home equity (assuming they have paid off homes) via reverse mortgages or HELOCs.


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## Eclectic12 (Oct 20, 2010)

GPM said:


> ... All the fellows are using the tfsa.


According to a FP article that quotes CRA/Stats Canada info - the ones I would have thought would be maxing it out (income range $150K to just under $250K) have 68% who have not maxed it out.

In contrast, income band $20K to just under $25K have 83% who have not maxed out their TFSA room.


These are much closer number that I would have expected plus are from before the additional room was granted.


http://business.financialpost.com/p...-tfsas-from-all-walks-of-life?__lsa=c07d-0331


Cheers


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## Eclectic12 (Oct 20, 2010)

sags said:


> ... Even the people who are investing in a TFSA have most of the money sitting in GICs.


So far, I haven't found numbers that haven't also raised questions about what's going on ( adding the quoted % for asset categories > 100%, I hold both equities plus cash so articles slanted to one type are going to count me either way).



Cheers


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## sags (May 15, 2010)

Agreed Harold, that a retirement of sorts can be fashioned from CPP and OAS/GIS, for a couple both collecting, but when one of them passes on............the outlook becomes even bleaker.

Living on say........$2,500 a month for a couple is a lot better than $1,600 for a single.

When the topic is written about, I find the authors use the "maximum" CPP a lot as a reference point, but most people receive less than the maximum amount.

I suppose though...........that GIS acts to bring it back up a little.

On the positive side, people in that position don't need to save $1,000,000 and shouldn't concern themselves if they can't.

They should set an attainable target of $50,000 or $100,000 in their own savings, to be dipped into only in extreme cases of need..........and it would last them through retirement.

Perhaps a lot of people need to get used to the fact they won't be travelling the world on a yacht, golfing at a country club, or driving a new Cadillac every year.

Expectations for retirement may be running a little high.

As my mom used to say.........you can't live a million dollar lifestyle on a 5 cent pocketbook.


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## Eclectic12 (Oct 20, 2010)

^^^^

Observing what's going on and knowing more than your age group helps.

My dad commented that the reason he was thinking about retirement savings was that he noticed when he started in his second job how many retired people were picking up work here & there to supplement their retirement income.


Cheers


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