# What would you do????



## John09 (Oct 20, 2013)

Been a reader and looking for opinions.

The storey and background.
Was almost mortgage free 3yrs ago and separated and remortgaged home to buyout ex. $230k

Then bought $215k rental property for child attending school and tenants along with child living in it covering all expenses and positive cash flow each month approx $400 after bills. Bought it $0 money down with credit line.

Sold my home, bought another home with girlfriend 50/50 ($800k prop)Paid my share off in full so no personal mortgage now. 
Purchase new vehicle with approx 4 months remaining @ $550 month pmt til paid in full.
$0 credit card debt 
Some school costs for child but osap loan and grants and resp helping there.
Other child post secondary next sept.

Have defined benefit retirement pension with indexing. Retiring in 5-9yrs early (55 approx) along with a $60k retirement payout .
Currently $95-100+k yr income. Promotion next yr to $115-120k yr
RRSP currently around $50k . My pension currently would pay almost $70k per yr to someone retiring now if they had the years.

I have no need for rsp which has been up and down and prob more down over last few yrs. think I have almost recouped all losses over past 5yrs. 
Am I better off cashing in rsp this year before my promotion kicks in and pay down my investment 
Property mortgage?
I have enough write offs that currently exceed investment property income to bring me in negative territory due to repairs needed to property which I am doing over the course of 5yrs spread out.
Figure this is is the time to cash it out before the large wage increase.

Your thoughts on utilizing the 50k minus what is held back????


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## John09 (Oct 20, 2013)

no opinions in 3 weeks?? must of really stumped people


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## Longwinston (Oct 20, 2013)

No, you should not cash out your rrsp. There are large penalties for doing so. Up your payments on your rental property if you are looking to get it debt free sooner than later. For someone in your situation going forward, I would suggest maxing out your TFSAs until retirement. Good luck


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## MoneyGal (Apr 24, 2009)

I didn't see this thread before, when it was originally posted.

You should not cash the RRSP while you are working. Continue to defer tax on the growth in the investments (and you may want to reposition the portfolio) until your income settles after retirement and beyond. Keep it all the way until death if you like, especially if you have "no need" for it. 

You are mixing together many distinct concepts here: tax deferral, investment growth, personal losses, business losses, rental expenses, etc. while ignoring some of the benefits you can get from even a modest RRSP; principally tax deferral [note: this assumes a portfolio positioned for growth] and diversification. Paying tax later is better than paying tax now.


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## kcowan (Jul 1, 2010)

First time for me too. You seem to be property rich. I hope that works out for you. You may want to look at getting rid of it before you retire.

With a pension of $70k plus CPP and OAS, you will have little buffer before claw-back happens so continue to use the TFSA until it is maximized. Beware that the 50% of your PR may be at risk. But leave the RSP alone.


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## My Own Advisor (Sep 24, 2012)

Making 6-figures is a good income but cashing in your RRSP with that income, is a bad idea.

Keep holding on to that DB pension.

Take down any debt you can before retirement. You'll be in great shape if you do, with that pension + CPP + OAS.


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## Cal (Jun 17, 2009)

I would wait until your income drops in retirement to begin to cash it out.


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## John09 (Oct 20, 2013)

Thanx for the responses. I have been leary on the idea but the rsp it has been so up and down and finally recouped most losses.
I did transfer 30% of rsp to my pension plan (Omers) and it returned 9% think it was last yr. So if I don't cash out which im leaning to, I think transferring the remainder to my AVC Omers is the way since it returns super well and not worry about it. 

I spend $5000 yr in repair and improvements on my rental property so I have great write offs against the rental income and expenses which last yr gave me $7000 tax refund.
THe main reason I was considering the withdrawl on top of fact I have no need for rsp upon retirement due to the plan as noted in first post,,, is the large write offs this yr vs this large pay increase in 2014 which will bump my income considerably. 

TFSA will be the item to invest in forsure once I have helped with post secondary for both kids. Have 30k inside this currently and daughters bill is sitting around 13k now but its deferred with osap til graduation in few yrs. Son starts college 2014. 
My only other liquidity is from sale of home and some side work,,, I have $40k in emerg slush funds to either invest or as well put down on rental property mortg. I do need emerg $ for emerg repairs etc on home and rental prop so I have to have a good $$$ float for the unknowns. 

Ideas?


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## kcowan (Jul 1, 2010)

Clearly continue to max the RESP for the 40% match but then build up the TFSA as a reserve fund. While the write-offs of the rental property might feel good, you should look at the ROI of that property while there is still a buoyant market. If it remains good without continued capital appreciation then hang onto it.


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## John09 (Oct 20, 2013)

kcowan said:


> Clearly continue to max the RESP for the 40% match but then build up the TFSA as a reserve fund. While the write-offs of the rental property might feel good, you should look at the ROI of that property while there is still a buoyant market. If it remains good without continued capital appreciation then hang onto it.


Can no longer contribute to RESP due to ages of kids. 
TFSA is on the plan.
THe extra liquid cash may go there then.
THe main purpose of the rental property was free rent for daughter while 500km from home in university and to break even at the least. As long as other students rent one of the 5 bdrms it is cash positive.
Since buying the largest unit and a end unit at $215k , smaller units have now sold at $240k. I will sell the unit when daughter is done school and no longer planning to stay in that city. The repairs and improvements are to maximize its value as the place will be completely modernized and finished with all great finishes to be a standout home forsale when I sell it.


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## alingva (Aug 17, 2013)

John09 said:


> no opinions in 3 weeks?? must of really stumped people


 You should guess why nobody answers


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## John09 (Oct 20, 2013)

alingva said:


> You should guess why nobody answers


Enlighten me! My guess is it stumped you as we'll :tongue-new:


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## kcowan (Jul 1, 2010)

John09 said:


> The repairs and improvements are to maximize its value as the place will be completely modernized and finished with all great finishes to be a standout home forsale when I sell it.


It sounds like a great strategic purchase. 

BTW the lack of responses may be because you seem to have it all together.


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