# RRSP Collapse.



## I'm Howard (Oct 13, 2010)

I would appreciate some comments on the folllowing scenario.

Retired, Couple,early 60's, collecting CPP, No Company Pension, No Debts, $400,000 home, Investments outside RRSP are $500,000, inside about $500,000.

Couple will inherit a further $250,000 within the next few years.

Frugal, they spend less than $40,000 a year.

My feeling is that they should start immediatly withdrawing from the RRSP's as their future income will be higher than current as they will qualify for OAS and the cash flow from Investments gets bigger.

One Child who will inherit everything, Child in early 30's.

The more candid the comments, the better, and please don't suggest they give money now to child, they are not of that frame of mind.


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## steve41 (Apr 18, 2009)

OK... I ran a 62yo couple each with 250K in RRSP, and 250K outside. 4% growth, 2%inflation, living in Ontario.

Two scenarios.... first.... shelter RRSP, attack nonreg first. Die-broke at 95 ATI comes in at $64,258.

Second, Cap the RRSP, not allowing it to grow. DB-at-95 ATI comes in at $63,901... slightly less advantageous than the 'Shelter RRSP' option. I can post these runs if desired.


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## I'm Howard (Oct 13, 2010)

Would you mind, many thanks.


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## steve41 (Apr 18, 2009)

OK.... to simplify things, I re-ran as a single instead of a couple, so I wouldn't have to put up twice as many PDFs.... For this guy (62yo, 4% rate, 2% infl, dying broke at 95) the 'shelter the rrsp' strategy delivers a $33,092 ATI and the 'attack the RRSP' strategy delivers $32,901.

Shelter RRSP

Attack RRSP


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## OhGreatGuru (May 24, 2009)

I'm Howard said:


> ...
> Retired, Couple,early 60's, collecting CPP, No Company Pension, No Debts, $400,000 home, Investments outside RRSP are $500,000, inside about $500,000.
> 
> Couple will inherit a further $250,000 within the next few years.
> ...


I don't see any need to rush into collapsing it. Their likely income from conservative investments, CPP, & OAS, split between 2 people, is still not going to put them in a very high bracket, or in OAS clawback range. They should be looking at converting at least part of the RRSP money to RRIFs at age 65 in order to take advantage of the $2000k pension income credit.


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## I'm Howard (Oct 13, 2010)

Good advice, but I am no longer sure what qualifies as a conservative investment?

I started them off last year, after taking it away from a Fee Only Planner, in ETF's that were mainly bonds and dividend, but they all did very well, producing about a 10% return, which makes me nervous.

I add small amounts of higher risk like GLD and CBQ, as well as IPL.UN and BTE.UN.

I am also of the opinion that since they are not touching most of the monies, that I am focussing on longer term estate.


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## OhGreatGuru (May 24, 2009)

I'm Howard said:


> ...
> I started them off last year, after taking it away from a Fee Only Planner, in ETF's that were mainly bonds and dividend, but they all did very well, producing about a 10% return, which makes me nervous.
> ...
> 
> I am also of the opinion that since they are not touching most of the monies, that I am focussing on longer term estate.


"but they all did very well, producing about a 10% return, which makes me nervous." Not quite sure why you would be nervous, as opposed to ecstatic. But this was presumably the effect of the recovering CDN stock market.

I will asssume the couple are content with your general plan to invest for longer term, as long their immediate cash flow needs are being met.

But from a risk point of view, I should think both you and they would be better off using the RRSP for the fixed income part of their portfolio, to meet their basic living requirements. Then you can both sleep better when the non-registered funds are put into something more volatile.


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