# rrif payments reducing gis



## barneymack (Mar 26, 2011)

When I first learned that RRIF payments were treated as income
for calculating Guaranteed Income Supplement payments, I was 
flabbergasted. RRIF's are savings, not income. Why wasn't I 
informed by the bank when I bought RRSP's that this was the case?
Of course the answer to that was the bank wants to sell RRSP's.

After my initial flabbergastness, I asked a financially-grounded 
friend of mine for his views. His view was that it was a conundrum
for the feds because if RRIF payments were not treated as income
for GIS calculations, people making as much as $60,000 solely by RRIF
payments would be entitled to GIS payments - clearly not the intent
of the GIS program. 

But the lower income person who needs the $5,000 payment
from his RRIF for daily living finds his GIS reduced by half that amount.
To me this is totally unfair. If he had put funds into a non-RRSP vehicle 
and withdrawn the funds, it would not affect the GIS payments.

So, is there a theoretical solution? Your comments, s'il vous plait.


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## kcowan (Jul 1, 2010)

The usual strategy is to melt down the RRIF during early retirement and before you qualify for GIS at age 65. Then stop drawing down until it becomes mandatory at age 72. This gives you 7 years of GIS. You can also selectively deregister portions of your RRSP before age 65, pay the tax on it, and invest the money in a TFSA. This might be better than reducing the GIS but you have to do the calculations...


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## HaroldCrump (Jun 10, 2009)

Barneymack, it depends on what your goal is : comfortable retirement or maximizing social benefits.
Isn't it better to have a comfortable retirement by savings in RRSPs even if it means you won't be eligible for GIS?
You will still get a large chunk of the OAS unless your RRIF income pushes you over the max. clawback limit, which is rather generous these days.

But if your goal has been to maximize social benefits, then yes, you should not have invested in RRSPs 
IMHO, living on GIS doesn't provide much of a retirement.

Secondly, the RRSP got you a tax break during the working years.
Now it is time to pay the piper.
It is only fair to the current generation of tax payers.

Theoretically, I don't see anything wrong with rules that you are experiencing.


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## financialnoob (Feb 26, 2011)

HaroldCrump said:


> Barneymack, it depends on what your goal is : comfortable retirement or maximizing social benefits.
> Isn't it better to have a comfortable retirement by savings in RRSPs even if it means you won't be eligible for GIS?
> You will still get a large chunk of the OAS unless your RRIF income pushes you over the max. clawback limit, which is rather generous these days.
> 
> ...


I agree. The misconception is that RRSPs are savings when they're really just tax deferrals on income. So when they are paid out later, they should be treated as income and taxed accordingly. 

The GIS was meant to assist low-income seniors, not provide a subsidy for all retired people. If people who don't need it don't get their full share of it, I am okay with that.


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## barneymack (Mar 26, 2011)

*RRIF's and GIS*

Nice discussion, guys.

True, RRSP are tax deferrals, but they are also savings. (Are you saying the "S" is irrelevent?)

Also, about paying the piper. We pay the piper by increased taxation when
funds are withdrawn from the plans, which, of course, is totally fair and expected. What is not fair, and I venture to say unexpected in a lot of cases, is the effect on GIS for lower income people.

True, I agree GIS should not be for seniors who don't need it. But there are
many seniors out here having around $20 or @25,000 income who
sure could use the un-reduced GIS. Their only mistake---buying RRSP's.

Let's keep this discussion going. I love it.


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## financialnoob (Feb 26, 2011)

There are a lot of seniors in the income bracket you mentioned who could use the full amount. Then again, so could I. So could my friends. Or a kid in university. Who couldn't? 

I agree that the "savings" is key in an RRSP, but the true savings come from being able to compound tax-free.

I don't really see an issue with the situation. If there's any legit gripe, I would take it up with whoever set up the RRIF as I'm sure they should have known about this and mentioned it. 

The GIS is an annual thing that must be renewed, so you could always adjust your withdrawals from the RRIF to get the full amount next year.


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## Sampson (Apr 3, 2009)

Onus is up to the individual to know what is going on. To blame the banks is like blaming the government for not telling you every year when you make RRSP contributions that this can impact future receipt of GIS payments. Rules are stated.

As kcowan points out, there are strategies available to 'circumvent'. My suggestion, retire early.


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## barneymack (Mar 26, 2011)

*gis*

Thank you for engaging me in this, Financialnoob.

By the way, this is not my scenario. I work with seniors with situations
like this.

It seems you are neglecting the mandatory aspects of the RRIF withdrawal.
You cannot adjust the withdrawal. A certain minimum amount must be withdrawn and taxed and that is what I am referring to.

Why are you referring to university students? Since when do they get GIS?
I am referring to seniors--me soon to be one -- who have contributed to society all their lives - have even bought RRSP's at the urging of financial institutions -- later to find out they were not fully clued-in as to the 
ramifications.

Really, why I am making these posts is to get a justification for this
treatment of seniors - so I can feel better.

So far I haven't got one - but I haven't given up.


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## stardancer (Apr 26, 2009)

It always confounds me that people don't understand what GIS means. It means a guaranteed income supplement to bring lower-income seniors up to a specific income level. It does not mean fully funding your retirement, on top of all your other income. It is not a right given to all seniors.

My husband and I saved and did without some things, but I would rather have a RIF from which to withdraw than rely on the meager GIS payment. The income level is approximately $15,000 for a single person and $20,000 for a married couple, excluding OAS.

Some would argue that the income level is too low, and that may be so. But at least it is there to catch the poorest of seniors. Are we so spoiled that we want the government to fund us forever? If so, we should be turning over our full paycheques to the government so every single one of us can collect GIS.


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## barneymack (Mar 26, 2011)

*Gis*

So it's Ok for a $25,000/yr earner who only needs $20,000 to live
to party away $5,000 each year rather than saving it because the
ONUS IS ON HIM to make the best choices.

And then at 65 he rips the taxpayer off for GIS when he had the means
to have saved hundreds of thousands of dollars.

The onus on the individual can only go so far. Broader society, and in the 
context of this thread, the financial institutions, should at least take some responsibility for at least informing individuals of pertinent consequences---
not conveniently forgetting them.


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## financialnoob (Feb 26, 2011)

barneymack: Sorry, just being goofy there. Didn't mean to say a university kid had a right to GIS, just saying we could all use a little extra cash, not just certain seniors in a specific income bracket 

And I acknowledge there is a mandatory withdrawal for the RRIF, but without specific information, we're just making guesses here. In that scenario, I was assuming someone who wasn't aware of the rules had withdrawn more than the minimum without being aware of the GIS adjustment. 

I'd imagine if the minimum withdrawal from it is enough to offset the GIS significantly, then that individual isn't someone who the GIS is targeted for. It's no different than when a friend of mine complains that he has run out of RRSP room. In the grand scheme of things, that's really not a bad problem to have.


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## barneymack (Mar 26, 2011)

*Gis*

Financialnoob

Haven't digested your last paragraph yet, but before that

Am I hearing you say there is no GIS adjustment if only the minimum
withdrawal is taken? I am not quite 65 so haven't experienced GIS yet
but I was under the impression GIS is adjusted no matter the size of the withdrawal.


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## barneymack (Mar 26, 2011)

*Gis*

Stardancer--

Good day.
You are ranting about what people believe about GIS, like I am 
ranting about GIS reductions for people with registered plans.

Of course I,and most, know that GIS is not a funding plan for retirement.

And you have a sizeable RIF, apparently.

What if the RIF would only cover living costs for one or two years?

Would you appreciate having the "meagre" GIS payments reduced even
more on top of being out of RIF money within a couple of years?

Think about it! Think about the unfortunate life that led to only having
saved enough for a couple of years.

The "meagre" GIS is going to have to be enough for this individual
for the rest of his life. It's insult to injury to reduce his GIS now just
because he scraped together enough for a small RIF.


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## financialnoob (Feb 26, 2011)

Sorry if I was unclear. Without any hard numbers, I was assuming that the mistake had been that the person had withdrawn more than just the minimum, which had a negative impact on their GIS amount. 

But if the minimum from the RRIF is so large that it wipes out the GIS supplement entirely, then that individual obviously doesn't need the GIS.

I could see some people with smaller RRSPs complaining that others who hadn't saved as much are now being subsidized a bit more. The overall annual income for someone who saved $100K would be almost the same as someone who saved nothing and got the bigger GIS payment to help equalize things. But we're still talking about people living off of around $15K per year, which can be done but isn't exactly a dream scenario. But without putting words into anyone's mouth, was that what you meant in the OP?


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## OptsyEagle (Nov 29, 2009)

Barney, you need to recognize that GIS is really the process of taking money from people who are currently working and taking care of themselves or from people who properly planned and saved for their financial future and basically giving it to the people who didn't.

Now there will be some exceptions here, but that is the basic idea of the program. In the case you describe, you are then asking these people, for whom the money should actually belong (called the taxpayer), to not only provide for the most destitute of the elderly, but also pay money to people who also have money of their own. That is simply asking for too much.

As for the banker not identifying this issue in advance. That is just another attempt to blame someone else for the situation you find yourself in. For heaven's sakes, should the banker just assume that you plan on collecting welfare?

Anyway, sorry for being so blunt, but I am the guy the government is trying to pacify with this rule and so far they are not doing a good enough job, but it is a start. Good luck to you.


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## stardancer (Apr 26, 2009)

barneymack said:


> Stardancer--
> 
> Good day.
> You are ranting about what people believe about GIS, like I am
> ...


Our RIFs are not that large- my husband's is $142,000 with one year of withdrawals under his belt; mine is $185,000, withdrawals to start in 3 years. Don't tell me we even saved up the required $1 million.

If the RIF runs out early, then GIS kicks in if you drop to below the income limit. But you must then apply for it. It is not automatic.


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## steve41 (Apr 18, 2009)

OK.... I faked your numbers based on interpreting your ages and assuming you have both maxed your CPP. Based on a rate of return of 4%, 2% inflation, living in BC, you can look forward to a $48K annual lifestyle out to your age 95. $4000 a month, and you still expect GIS? Give me a break!


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## barneymack (Mar 26, 2011)

*Gis*

OptsyEagle---

Nothing is too blunt for me. Take it and give it.

What makes you think the banker had any assumptions at all -- either
welfare or head of General Motors. The banker, to be worth his salt,
should cover all possibilities - favorable or unfavorable - and he should
cover situations he darn well knows the client would want to know
(such as GIS implications after buying a RRSP)

As for me wanting to give money to people who already have money.
Well, how much money do they have? If it's not enough to cover a
year of basic expenses, yes, their GIS should not be reduced.

I am trying to convey a concern here. Maybe I'm not getting through.

-- And for the moment I am getting a little tired of trying to do that

-- I would like to hear about your exploits with the govt if you care to tell me


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## OptsyEagle (Nov 29, 2009)

Barney, my only thoughts on the fairness of the situation you discuss, is that if the money had not been put into an RRSP, the current rules would have the taxpayer funding a higher level of GIS, when the RRSP route, does not. This is the part that I think is unfair.

My answer to it would be to asset test an applicant for GIS eligibility and why the government does not do this is a mystery to me. Either way, in my opinion, a reduction in GIS should be warranted because the recipient had access to money from other personal sources. The government it seems wants to income test everything and that is where a lot of the unfairness comes from.

My point on the fairness is to address the situation of the retiree that has sacrificed and addressed the issues surrounding their own retirement expenses and now is required to chip in some more money, through taxation, for someone else who did not.

It is a difficult problem to fix, because within it are numerous personal situations and scenerios. The government tries to frame a set of rules to it, but of course they will always benefit some and end up hurting others.

As for the banker, I think you should lower your expectations a little. If the question was asked and you received the wrong answer, that would be different. It is also possible that in this case, enough information was known to identify the problem you discussed in advance. That also would be change my opinion, but for the most part I don't think you can expect them to go through every single detail where an RRSP can effect a person, when so many details would have no effect on many individuals at all. In any event, in my book the blame will still end up on the individual even if their only fault was that they relied on a banker.


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## barneymack (Mar 26, 2011)

*Gis*

OptsyEagle---
Thank you. Very well spoken words, in my humble opinion.
And a great calming effect on my being -- enough that I
should be able to put my disgust to rest. Thank you again.

Can't leave without asking -- what is OptsyEagle?


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## Karen (Jul 24, 2010)

I tend to disagree with those of you who don't think the bank had any responsibility in this situation. Banks advertise heavily in RRSP season, and they present themselves as a valuable source of information about RRSPs, not simply as salespeople. I think the bank representative should have an obligation to advise low-income clients that an RRSP may not be the best way for them to save for retirement. I also notice that many so-called expert financial advisors who write columms and appear on talk shows, fail to point out this fact. These days, of course, low-income people are better off to hold their registered savings in a TFSA, but that option wasn't available until very recently, so that information is of no use to current retirees. I have several friends who faithfully saved small amounts of money in an RRSP and realize now that they did the wrong thing, at least from a purely financial point of view.

It's all very well to criticize people for wanting to "live off the taxpayers" but I feel a lot of empathy for people who are trying to survive on a bare minimum of income, and I think people in that situation have every right to arrange their finances in a way that takes advantage of the GIS and RIF rules. Depending on how little is in his RIF, the subject of Barney's thread might be better off to cash in his whole RRIF in one year, pay the taxes, and then perhaps be eligible for the full GIS each year after that. Without more detailed information, we can't assume that would work to his advantage in the long run, but it's worth crunching the numbers on.

Having said that, I stress that my feelings about this extend to people who have practically nothing, NOT to people who keep their income low but have substantial assets.


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## Potato (Apr 3, 2009)

barneymack said:


> If he had put funds into a non-RRSP vehicle
> and withdrawn the funds, it would not affect the GIS payments.


Well, that's not quite a fair comparison. If someone had a pile of investments in a non-registered account, then their income from investment returns would also affect their GIS. 

Perhaps it's fair to criticize the RRIF minimum withdrawals for being too high for the current interest rate environment (when they were set, it was quite feasible to get ~7-8+% interest income on your assets), but it's not quite as all-or-nothing as you suggest.


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## financialnoob (Feb 26, 2011)

Karen said:


> I tend to disagree with those of you who don't think the bank had any responsibility in this situation. Banks advertise heavily in RRSP season, and they present themselves as a valuable source of information about RRSPs, not simply as salespeople. I think the bank representative should have an obligation to advise low-income clients that an RRSP may not be the best way for them to save for retirement. I also notice that many so-called expert financial advisors who write columms and appear on talk shows, fail to point out this fact. These days, of course, low-income people are better off to hold their registered savings in a TFSA, but that option wasn't available until very recently, so that information is of no use to current retirees. I have several friends who faithfully saved small amounts of money in an RRSP and realize now that they did the wrong thing, at least from a purely financial point of view.
> 
> It's all very well to criticize people for wanting to "live off the taxpayers" but I feel a lot of empathy for people who are trying to survive on a bare minimum of income, and I think people in that situation have every right to arrange their finances in a way that takes advantage of the GIS and RIF rules. Depending on how little is in his RIF, the subject of Barney's thread might be better off to cash in his whole RRIF in one year, pay the taxes, and then perhaps be eligible for the full GIS each year after that. Without more detailed information, we can't assume that would work to his advantage in the long run, but it's worth crunching the numbers on.
> 
> Having said that, I stress that my feelings about this extend to people who have practically nothing, NOT to people who keep their income low but have substantial assets.


I agree. When people go to the banks to discuss their future and savings, they sit with a person who has "Financial Planner" on their business card, NOT "RRSP Salesperson." People are often being misled by someone who is supposed to be an "expert." 

Let's be honest. We can't be experts in everything. If you take the car to the mechanic and they rip you off because you don't know anything about cars, is the mechanic free from guilt because you should know better? Or if you don't know much about computers and get charged 5 times what you should have for a repair, is that only your fault? 

The financial planner is acting as an "expert" offering advise. I'm not absolving blame from individuals, as I think everyone is ultimately responsible for themselves. But if they're not offering any real expertise, they should be called salespeople so they can't mislead people.


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## Four Pillars (Apr 5, 2009)

Sampson said:


> Onus is up to the individual to know what is going on. To blame the banks is like blaming the government for not telling you every year when you make RRSP contributions that this can impact future receipt of GIS payments. Rules are stated.
> 
> As kcowan points out, there are strategies available to 'circumvent'. My suggestion, retire early.


+1

Unfortunately, there are quite a few seniors with very small RRSPs/RRIFs and no pension. From a financial planning point of view, they would have been better off saving the money in a non-registered account/tfsa and maximizing GIS.

As stated, strategic withdrawals (ie withdrawing more than the min) could be beneficial in order to empty the RRSP/RRIF.


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## OptsyEagle (Nov 29, 2009)

We are all assuming that the banker failed in their responsibilities, but we were not privy to the conversation. I am sure if my mother went down to the bank she would most likely hear everything about the rate of interest and possible tax refund and fail to acknowledge any information pertaining to Guaranteed Income Supplement because she might think of it as old age pension or something else.

For this reason, people need to arm themselves with the proper information or take a confident with them who can ask the proper questions and disseminate the answers properly.

My personal opinion, on the bigger issue ,is that the government needs to back away from anymore increases in GIS programs and needs to faze out this type of program in the future, all together. All they are going to do by providing more benefits to the elderly is ending up with more elderly people needing benefits. It's a law of economics and it is rarely ever broken. Even you people are advising seniors to "game" the system to access these benefits (and there is nothing wrong with this advice by the way). 

I don't like to see people suffering, but I personally think a retirement of financially suffering parents will go a lot further in convincing a child to save for their retirement, then 1000 Scotiabank "You are richer then you think" adverstisements will ever do. 

We are too compasionate to our citizen's and therefore why worry about your own future when you can be assured someone else, who must have gotten lucky or something, will look after your future for you. This is what we are teaching our kids.


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## kcowan (Jul 1, 2010)

Also remember that it is not all or nothing. A senior should create enough of a RIF to get the $2000 pension credit , i.e. a minimum withdrawal of $2000, or a designated w/d to cover that amount of income. So they can keep most of their money in their RRSP and just segment enough of it in a RRIF to maximize their after tax yield.

I do not have a problem with a senior maximizing their after tax benefit, especially those that would qualify for GIS. OTOH, why are people with that little money being encouraged to take RRSP deductions when they worked? This is an example of financial pornography perpetrated by the banks. Remember that they will eventually pay the piper when all of their remaining RRIF is taxed the day they die.

My MIL finally paid the tax when she died at 93. She was taking out the necessary 20% from her RRIF every year and paying a good amount of tax on it. By then it was so small that TD charged $25/year to administer it.


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## barneymack (Mar 26, 2011)

*Gis*

Originally Posted by barneymack 
If he had put funds into a non-RRSP vehicle 
and withdrawn the funds, it would not affect the GIS payments. 

From Potato:
Well, that's not quite a fair comparison. If someone had a pile of investments in a non-registered account, then their income from investment returns would also affect their GIS. 

To Potato
Thank you. I did misspeak. The income would affect the GIS but only the
income. The withdrawn principal would not.


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## HaroldCrump (Jun 10, 2009)

barneymack said:


> Thank you. I did misspeak. The income would affect the GIS but only the income. The withdrawn principal would not.


That is because you would have set up a non registered investing account with after-tax $ whereas the RRSP is before tax $.
All else being equal, the RRSP should be tax neutral.
However if _maximizing social benefits_ is your primary objective, then yes you should not have contributed to RRSP, CPP or any other type of retirement plan.
Methinks you are simply frustrated for not receiving social benefits that you feel you are entitled to, and have been building up that expectation for many years.


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## barneymack (Mar 26, 2011)

*Gis*

Harold Crump and all
Yeah
Some guys strive to maximize their social benefits.
Some guys cheat on their wives.
Some lucky guys do both at the same time.

Harkening back to my first post on this thread.
I have come up with a theoretical solution that may be OK with me
(until it is, no doubt, critiqued by you guys. Hail, here it is:

"The first $10,000 of a yearly RIF payment should be exempt
from the GIS income calculation"

If I don't here from you, I will assume you are in favour. (That should
bring some reaction.)


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## financialnoob (Feb 26, 2011)

Again, I think that defeats the purpose of the GIS. To generate say $10K in minimum RRIF payments, the person would have over $200K saved up. That's not a huge amount, but it's not nothing either.

A person with no savings could expect around $14K with max GIS, while someone with $200K saved up would have around $19K minimum, with the ability to withdraw more whenever they needed to. The difference is they'd receive around $5K less from the government.

That may make the person with modest savings annoyed with the person who saved nothing. But isn't the person who saved $400K annoyed that the person with $200K gets more money from the government? And doesn't the person who saved $600K get annoyed at the person with $400K? And on and on and on.

You want the first $10K to not count, but what about the person with a bigger RRIF who wants the limit to be $20K? Or the person with the bigger RRIF who wants the limit to be $30K?

The point of the GIS wasn't to give an extra $665/month to every single retiree. Otherwise, they would just increase the CPP. I understand that it isn't "fair." But if we made it fair for say one person, then it would be unfair for another. On and on and on.


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## barneymack (Mar 26, 2011)

*Gis*

FinancialNoob ---
To me, you are over-analyzing.
Everybody gets a maximum $10,000 break.

$5,000 gets a $5,000 break
$10,000 gets a $10,000 break
$50,000 gets a $10,000 break
$3,000,000 gets a $10,000 break

How can anyone be annoyed with anyone else?


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## financialnoob (Feb 26, 2011)

I just don't get why it's necessary. The $10K break basically provides max GIS to all retirees who have up to approximately $200K saved up. To me, the purpose of the GIS is to help the most needy of seniors. I don't think giving the same amount to someone with nothing and someone with $200K makes sense is all.


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## OptsyEagle (Nov 29, 2009)

You are forgetting that GIS is welfare and people with money should not get welfare.

My original point is that this type of welfare should be eliminated completely but it seems giving money to people who didn't realize they were getting older every year and need to save some money for the time they cannot work, seems to generate election votes.

It's a shame because if it continues, it will grow and if it grows it cannot continue. Who gets to bite on that problem. I guess some government, many terms in the future, as always.


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## barneymack (Mar 26, 2011)

*Gis*

Financialnoob --

To me, giving the same break to everyone makes eminent sense.
Nobody can be cheesed off.

Ok, the figure of $10,000 break is arbitrary. $4K or $5K would work.

My whole point is there should be a mechanicsm to cover off
unfortunate lower income people who have fallen through the cracks.


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## Four Pillars (Apr 5, 2009)

barneymack said:


> ...
> 
> 
> *My whole point is there should be a mechanicsm to cover off
> unfortunate lower income people who have fallen through the cracks.*


There is. And guess what it's called? Yup - GIS! 

If you ask for a break on top of a break, you are just being greedy.


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## barneymack (Mar 26, 2011)

*Gis*

OptsyEagle:

You calmed me down yesterday - but now it's rising again

I'm not talking about people who conveniently forgot they were
getting older.

I'm talking about people who have had accidents, being seriously ill,
had traumas in their lives, but who did have noble goals and some
RRSP savings before their misfortune.

These people should not have their GIS reduced because they managed
to save a bit in RRSP's.


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## Four Pillars (Apr 5, 2009)

So where is that 'ignore' button again?


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## OptsyEagle (Nov 29, 2009)

barneymack said:


> OptsyEagle:
> 
> These people should not have their GIS reduced because they managed
> to save a bit in RRSP's.


Yes they should. 

Their GIS use to be someone else's money who probably went through many of the same hardships and managed to figure out a way to look after themselves. As I have always said, there are many exceptions, but the norm would be closer to my point. 

My fundamental thoughts surrounding the economics of welfare is that if you provide free money to elderly people who are needy, you will end up with a society of more needy elderly people. This is how it works, it is not my doing. It's basic economics. 

You can't tell me all those people collecting GIS, when they were younger, never went out for dinner, never took a trip, never owned a car, never bought a second TV. Come on.

There was a previous thread on this board about all the people lining up to buy the new iPad2 for about $1,000 I think. Now with 60% of our population sitting on underfunded retirement plans, I have to ask myself how many of those people will I need to support when they are retired. My guess is a lot of them. How will I feel when I know they were blowing money like drunken sailors when they were young. Well, like you, I bet it will get my blood boiling.

Good luck to you.


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## kcowan (Jul 1, 2010)

barneymack said:


> Financialnoob --
> 
> To me, giving the same break to everyone makes eminent sense.
> Nobody can be cheesed off.
> ...


Are you familiar with the age credit. Everyone who makes less than $32k a year gets it when they are 65 or older and it is 6500.

Above $32k it is clawed back by means testing. This means that people who don't need it, don't get it. And it is totally independent of GIS although GIS contributes to the means if it is received.


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## barneymack (Mar 26, 2011)

*Gis*

FourPillars:
Ok Simmer down, my friend. No need for all of us to get emotional.

Try to understand what I am saying.

For example, I am talking about seniors who are forced to use their RIF for medical and rehabilitation expenses for either themselves or an indigent relative. They have to manage their funds prudently for the rest of their lives, on top of having to cope with an unwell person or themselves.
If you think they are being greedy and don't deserve to get un-reduced
GIS, fine -- that just shows how passionate you are.

By the way, has anyone close to you ever needed your help financially?
And what if you didn't have the required money?


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## barneymack (Mar 26, 2011)

*Gis*

KCowan --
Oh boy, now we're talking income tax. 
Define "don't need it"


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## barneymack (Mar 26, 2011)

*You name it*

FourPillars
Are you checking out. Sorry to hear that.

By the way, thanks for that answer you gave me the other day on another
thread.
That RIF payments must come out of EACH bank that they are being held in.


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## barneymack (Mar 26, 2011)

*You name it.*

This is a serious topic, but just thinking ---
In all these posts, not one bit of hilarity injected
(except my feeble "cheating on the wife" bit) 
Even court judges have been known to
sling the ocassional phrase to try and ease the
atmosphere. We are not enemies, I hope.


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## Eclectic12 (Oct 20, 2010)

OptsyEagle said:


> We are all assuming that the banker failed in their responsibilities, but we were not privy to the conversation. I am sure if my mother went down to the bank she would most likely hear everything about the rate of interest and possible tax refund and fail to acknowledge any information pertaining to Guaranteed Income Supplement because she might think of it as old age pension or something else.
> 
> For this reason, people need to arm themselves with the proper information or take a confident with them who can ask the proper questions and disseminate the answers properly.
> 
> [ ... ]


+1 on that the situation may not be that simple!

Selective hearing or overlooking critical details are some of the many twists that may or may not be involved.


My dad was an example. When he finally was forced into mutual funds by low interest rates and received good returns - he would complain "why didn't the credit union suggest this?"

I stood in line beside him and when the credit union teller *did* suggest he consider other options including mutual funds, he responded that


> GICs and interest - that's all I want!



Bottom line in my opinion is that regardless of whether there is an expert in front of you - learn what you can plus check other sources.

Heck - I've glossed over stuff and then the follow-up info saved me from serious mistakes.


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## Eclectic12 (Oct 20, 2010)

financialnoob said:


> I agree. When people go to the banks to discuss their future and savings, they sit with a person who has "Financial Planner" on their business card, NOT "RRSP Salesperson." People are often being misled by someone who is supposed to be an "expert."
> 
> Let's be honest. We can't be experts in everything. If you take the car to the mechanic and they rip you off because you don't know anything about cars, is the mechanic free from guilt because you should know better? Or if you don't know much about computers and get charged 5 times what you should have for a repair, is that only your fault?
> 
> [ ... ]


Agreed that it can be misleading and I'd much prefer that better info was given.

However - it is a business so the question becomes how much time can they spend educating people about GIS or other aspects that may or may not affect them? 

Or maybe they should charge a fee - but then how many are going there in the first place because there is no fee?


In any case, I notice that the same people who educate themselves at least enough about their car or computer to attempt to avoid the "expert" ripping them off - tend to refuse to do the same for finances, pensions and government programs.

It puzzles me why they see a need in one area (i.e. their car/computer) but refuse in another (i.e. their finances/retirement).

C'est la vie ...


Cheers


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## financialnoob (Feb 26, 2011)

barneymack said:


> Financialnoob --
> 
> To me, giving the same break to everyone makes eminent sense.
> Nobody can be cheesed off.
> ...


I'm with Four Pillars. They did do that, and they called it the GIS.

As for the "same break to everyone," we're either talking about an increase to CPP across the board to everyone (which would be the same amount, thus same break), or else you're talking about a tiered system with cut-offs, and wherever the cut-off is, someone will feel cheesed off. Case in point: the GIS has tiers with cut-offs, and you're quite cheesed off.



Eclectic12 said:


> Agreed that it can be misleading and I'd much prefer that better info was given.
> 
> However - it is a business so the question becomes how much time can they spend educating people about GIS or other aspects that may or may not affect them?
> 
> ...


Those are all excellent points and I don't disagree with any of them. I would just like a bit more transparency about it is all. 

If the person at the bank is not qualified to plan finances, then don't call them a financial planner. They're an RRSP or Mutual Funds salesperson.

Again, not trying to blame others as we're all responsible for our own decisions. And it is very strange how some take the time to investigate their cars/computers, but not their finances.


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## Eclectic12 (Oct 20, 2010)

financialnoob said:


> I'm with Four Pillars. They did do that, and they called it the GIS.
> 
> [ ... ]
> 
> ...


Yes - better transparency would be a good thing to be legislated. 

I say legislated as most of the businesses (i.e. banks, insurance companies, mutual fund companies etc.) likely won't want to risk losing sales by being transparent.


As for blaming others - I guess that's one of many things about this situation that bothers me. I can understand being upset at misunderstanding (accidental or otherwise) but too many people I'm talking to these days take the "it should have been someone else's responsibility" route. Whatever happened to "you get what you pay for" so if it is free - make sure to double-check!

Hmmm ... maybe there is another thread here.


As for the approach people take to finances - the main confusion on my part is how other-wise bright people treat finances totally differently. I mean that both cars/computers are complicated - yet somehow they can figure out that a bit of knowledge can avoid the worst of the rips-offs but finances are "different" (i.e. "expert" knowledge is required for finances where general knowledge can avoid some of the scams for cars/computers). 

To me - knowledge is knowledge with the relatively the same potential to identify great opportunities or avoid issues.


Cheers


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## kcowan (Jul 1, 2010)

barneymack said:


> KCowan --
> Oh boy, now we're talking income tax.
> Define "don't need it"


That is the essence of means testing for non-contributory social assistance programs. It is applied to all kinds of assistance. The government uses the income tax system to claw back the assistance that was received.


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## OhGreatGuru (May 24, 2009)

barneymack said:


> When I first learned that RRIF payments were treated as income
> for calculating Guaranteed Income Supplement payments, I was
> flabbergasted. RRIF's are savings, not income. Why wasn't I
> informed by the bank when I bought RRSP's that this was the case?
> ...


1. The object of investing in an RRSP/RRIF is so that you won't be so poor in retirement that you have to collect GIC in the first place.

2. Statistically speaking, not too many "low income" earners who will become eligible for GIS are likely to have accumulated any significant RRIF, so it's a bit of a moot point for most.

3. _RRIF's are savings, not income._ Your "savings" contributions that you put into your RRSP were deducted from your income, and were tax-free; all the earnings inside the RRSP are tax-free; when you finally make withdrawals it is now taxable income. There is no secret about this, and it is pointless to complain about it.

4. _If he had put funds into a non-RRSP vehicle and withdrawn the funds, it would not affect the GIS payments._ He may not be taxed on withdrawals from non-registered accounts, but his contributions would have been made with after-tax dollars, and he would be taxed on all annual earnings in the account, which would affect his GIS eligibility.

5. You seem to be confusing RRIFs with TFSAs, which were not invented when RRIFs came into being.


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## Eclectic12 (Oct 20, 2010)

financialnoob said:


> [ ... ]
> 
> Those are all excellent points and I don't disagree with any of them. I would just like a bit more transparency about it is all.
> 
> ...


Though some of the "qualified" people who hang out their own shingle that I've met I would not only say aren't qualified - I'd say they are shysters/criminals!

*Oh well* ...


Cheers


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## financialnoob (Feb 26, 2011)

Eclectic12 said:


> Yes - better transparency would be a good thing to be legislated.
> 
> I say legislated as most of the businesses (i.e. banks, insurance companies, mutual fund companies etc.) likely won't want to risk losing sales by being transparent.
> 
> ...


You're right, it would have to be legislated, and it won't be.

And I agree, we could fill another thread or another forum or even an encyclopedia set on people blaming others.



Eclectic12 said:


> Though some of the "qualified" people who hang out their own shingle that I've met I would not only say aren't qualified - I'd say they are shysters/criminals!
> 
> *Oh well* ...
> 
> ...


Sadly, you're right on the mark about that.


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