# Perspectives on funding retirement from RRSP



## jimbob.seeker (Sep 12, 2013)

Hello, my name is JimBob. My wife and I would like to retire in approximately one and a half years.

I am hoping that fellow members of this forum will be kind enough to give me their perspectives on funding my retirement primarily from my RRSP.

First let me provide my background information.

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Background Info
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Married
My Age: 58
Wife's age: 56
Debts: None
Own Home: yes, a small single family dwelling worth about $450,000.00 today
Dependents: None
Personal RRSP: Yes $500,000.00 (90% fixed income at the moment)
Wife's RRSP: $200,000.00 (90% fixed income)
Personal TFSA: $18,000.00
Wife's TFSA: $20,000.00
Non-reg Investment income: About $6,000 pa. in dividends and about $5000.00 yearly in interest income
Wife's company pension = $40,000.00 starting in about 1.5 years from today
Desired after tax income = About $4,500.00 per month (after taxes)
Assumed life expectancy = 90 years

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Objectives
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1) To fund our retirement solely on our RRSP money + wife's pension until age 90/92.
2) Leave our non-reg savings untouched for as long as possible to cover emergencies and possibly helping our adult kids if they need a hand at some point in the future. Also to take us the rest of the way if we or one of us lives beyond 2045

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Other Notes
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Wife's company retirement benefits do not include any health or dental coverage

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Additional info as requested 
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a) Wife's pension is indexed to CPI
b) Wife's pension includes a bridge supplement (equiv to CPP & OAS) until age 65 only (expect CPP/OAS to kick in then)
c) Therefore wife's $40k co. pension will start at age 57.5 and after 65, combination of company+CPP+OAS pensions will still be about $40k.
d) If wife or I live beyond 90 and RRSP money is finished, the non-reg savings and accumulated returns will hopefully take us (one or both) the rest of the way.
e) Non-reg assets now at about $300k equities and $200K fixed income.
f) I have no company pension but expect to collect $15K CPP & OAS at age 65
g) Hopefully neither of us will ever have to work in retirement (except for volunteer work -no pay expected).
i) Considering buying a $100,000 indexed life annuity at age 60 as a start to tapping into the RRSP
j) Not sure how to best tap into the rest of RRSP, minimize taxes and also make it last until about year 2045-2047.


I would appreciate any and all comments.

Please let me know if I left out any important information.

Thanks,
JimBob


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## andrewf (Mar 1, 2010)

You mention your non-registered dividend and interest income, but not the assets that generate that income. Sounds like $150k-$300k in equities and $200k in fixed income.

This sounds like a job for steve41, Mr. RRIFmetric. Sounds like you will be able to generate the income you're looking for, no problem, between your wife's pension and OAS. In fact, I think you could afford to spend more, if you wanted. Not that you have to. The $40k pension is worth quite a lot. Like, close to $1 million as a rough estimate.


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## MoneyGal (Apr 24, 2009)

You may want to model it out past age 90. A 56-year-old Canadian woman has a greater than 30% chance of being alive past age 90 (which by my reckoning is two years past YOUR age 90 - I'm not clear whose "age 90" is being specified here).


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## steve41 (Apr 18, 2009)

> This sounds like a job for steve41, Mr. RRIFmetric.


Sorry, I am in the middle of getting out my annual release. Remind me in a month's time. Oh, and it is RRIFmetic (rhymes with 'arithmetic').

Steve41. (BTW the '41' isn't my age, it's my year of birth)


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## Maltese (Apr 22, 2009)

I believe that it is important to know if your wife's pension is guaranteed to be indexed to inflation or not.

Maltese


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## My Own Advisor (Sep 24, 2012)

Desired after tax income = About $4,500.00 per month (after taxes), is $54K/year after taxes.

Thanks to your wife's company pension = $40k and with $700K in investments, you should be a good place before CPP and OAS come in. Even moving half of $700k ($350K) to non-registered (the other half lost to taxes, for an extreme example), you should be able to generate a solid $15K per year in dividend income from ETFs or stocks. 

Hopefully most of that income over time, can be tax-free as you age thanks to the TFSA. 

Well done.


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## andrewf (Mar 1, 2010)

As a simple suggestion, I would say withdraw what is required to make up the shortfall from the pension/OAS/CPP (which will be small once your wife's pension kicks in). Once you get to about 70, consider buying some additional annuities to top up.

I don't really like die broke at 90 assumptions. My grandparents are close to 90 and just about to go into a nursing home. The have some annuities (really, GMWB) that will cover the cost (when combined with CPP/OAS).


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## jimbob.seeker (Sep 12, 2013)

*Non-reg assets*



andrewf said:


> You mention your non-registered dividend and interest income, but not the assets that generate that income. Sounds like $150k-$300k in equities and $200k in fixed income.
> 
> This sounds like a job for steve41, Mr. RRIFmetric. Sounds like you will be able to generate the income you're looking for, no problem, between your wife's pension and OAS. In fact, I think you could afford to spend more, if you wanted. Not that you have to. The $40k pension is worth quite a lot. Like, close to $1 million as a rough estimate.



1) AndrewF, your estimate of our non-reg assets is bang on.
2) My wife's pension plan includes a "bridge" that provides a supplement to those that retire before 65 (ie. before CPP & OAS kicks in). The bridge is worth approximately the same as what my wife would get from OAS and CPP. I should have included that information in the original post. Therefore even after age 65, my wife's pension plus CPP/OAS will still be about $40K.
3) My wife's pension will be indexed to the CPI.
4) I expect to collect about $15,000.00 per year from CPP and OAS starting at age 65.

Thanks,
JimBob


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## jimbob.seeker (Sep 12, 2013)

*life expectancy*



MoneyGal said:


> You may want to model it out past age 90. A 56-year-old Canadian woman has a greater than 30% chance of being alive past age 90 (which by my reckoning is two years past YOUR age 90 - I'm not clear whose "age 90" is being specified here).


Hi MoneyGal:

You're right, ladies are really the stronger sex.

I am guessing that we'll both live to about age 90'ish but my wife has a better chance of living beyond 90.

If I go to meet the Big Guy upstairs before her, she will have an indexed pension plus the non-reg assets to live on.

So I guess the "90" is really my projected date to meet the Big Guy. We will try to live on our RRSP money until 90/92. If I survive beyond 90 and the RRSP money is done, hopefully the non-reg assets and the accumulated returns will be enough to take me/us the rest of the way.

I think my wife should be OK regardless once again thanks to her indexed pension.


Thx,
JimBob


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## jimbob.seeker (Sep 12, 2013)

*pension indexed?*



Maltese said:


> I believe that it is important to know if your wife's pension is guaranteed to be indexed to inflation or not.
> 
> Maltese


Hi Maltese:

Yes, my wife's pension will be indexed to the CPI.

Also, my wife's pension plan includes a "bridge" that will supplement her pension with an amount roughly equivalent to CPP/OAS if she retires before 65. At 65, the supplement will disappear but CPP/OAS will kick in so her total pension income (company/CPP/OAS) will still be about $40K.

Thanks,
JimBob


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## jimbob.seeker (Sep 12, 2013)

*Thanks to my wife's co. pension*



My Own Advisor said:


> Desired after tax income = About $4,500.00 per month (after taxes), is $54K/year after taxes.
> 
> Thanks to your wife's company pension = $40k and with $700K in investments, you should be a good place before CPP and OAS come in. Even moving half of $700k ($350K) to non-registered (the other half lost to taxes, for an extreme example), you should be able to generate a solid $15K per year in dividend income from ETFs or stocks.
> 
> ...


Hi "My Own Advisor":
Thanks for the encouraging words. Yes my wife's company pension will certainly help in a big way.
I like the idea of moving funds to the TFSA to shelter the investment income.

Luckily I bought some blue chip (bank/pipelines) stocks after the 2008 crash to help make up for what losses I incurred during the crash. However now I am nervous about buying any equities at this time since I am by nature very conservative and the markets are soaring now.

So the big question now is how to go about tapping into the RRSP money and minimize the tax hit.

As an extreme example, if I spend say $500K on a single life annuity at age 60, I will get about $30,000.00 annually for the rest of my life. This will not be good if I die a few years into retirement since my wife would not get anything from the annuity. 

I guess I need more time to devise a good plan.

Once I get more feedback, I will consider all comments and propose a strategy for further comments.


Thanks,
JimBob


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## jimbob.seeker (Sep 12, 2013)

*Will remind you a month from now.*



steve41 said:


> Sorry, I am in the middle of getting out my annual release. Remind me in a month's time. Oh, and it is RRIFmetic (rhymes with 'arithmetic').
> 
> Steve41. (BTW the '41' isn't my age, it's my year of birth)


Hi Steve41:

Thanks, I hope to consider all feedback and propose a strategy in a few weeks.

I will post again in about a month and then maybe you will have time to provide your comments/recommendations.

Thx,
JimBob


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## OnlyMyOpinion (Sep 1, 2013)

If you adjust your life expectancy into the 90's and the numbers still show you not outliving your income sources as you expect - then the annuity is more of choice than a necessity? You already have pension and cpp 'annuity' income streams. 
With the large fixed component, the risk in your RRSPs is in staying ahead of inflation not of capital loss. 
You might consider annual (RRIF) withdrawls to top up what you need until your early 70's, and then see if purchasing an annuity at that time fits your future income needs (at that age you'll get more bang for your annuity buck, and interest rates might even be higher and provide a bump)?


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## jimbob.seeker (Sep 12, 2013)

*Yes inflation could be a dangerous*



OnlyMyOpinion said:


> If you adjust your life expectancy into the 90's and the numbers still show you not outliving your income sources as you expect - then the annuity is more of choice than a necessity? You already have pension and cpp 'annuity' income streams.
> With the large fixed component, the risk in your RRSPs is in staying ahead of inflation not of capital loss.
> You might consider annual (RRIF) withdrawls to top up what you need until your early 70's, and then see if purchasing an annuity at that time fits your future income needs (at that age you'll get more bang for your annuity buck, and interest rates might even be higher and provide a bump)?


Because of my wife's pension I am inclined to think that if we live past 90 we will still be OK income-wise. So what you said about the annuity being a choice makes sense.

Yes you're right, although inflation is not a problem now, it could become one in the years ahead. The maturity dates of the bonds in my RRSP are staggered over the next 2 to 10 years or so. Hopefully I can make some adjustments as bonds mature in the future to counter the effects of inflation. I am also considering some portion of indexed annuities at a later time as you suggested to get more bang for the buck. (This will still be consistent with my risk-averse nature).

Thanks for the comments.

Regards & Thx,
JimBob


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