# My retirement plan...would like to read feedbacks!



## gibor365 (Apr 1, 2011)

Genaral info:
I'm 51 , next year will be fully retired.
My wife 42, working income 200K+.

Assets: in total around 1.5M , split 54% equities, 46% fixed income. my SRRSP, 2 RRSPs(my and wife's), 2 TFSAs, 2 LIRAs, small non-reg (my wife). No debt. Own small detached house in Mississauga.

The plan:
I'm planning to convert my SRRSP to SRRIF in 2019 (so should start process this year) and maybe in 2020 convert my ind RRSP to RRIF, in 4 years to break up my LIRA (I think I can 50% of it to transfer to RRIF, right?).

The reasons:
I want to switch SRRSP to SRRIF, because:
- no attribution rules on SRRIFs, if I take minimum payment (and I intend to take only minimum payments)
- proceeds from SRRIF payments to invest into TFSA and back to SRRSP, thus my wife gonna get 50% tax break (she's obvioulsy in the highest tax bracket).
- deplete value of registered accounts, to avoid higher taxation when I will be in my 60's and start getting OAS and CPP.
- avoid possible OAS clawback.

Starting 2019, my only taxable income will come from HISA/GIC and will be around 9-12K (depends on promo rates). SRRIF payments will be around 7.5K. So, in the worst case, my average tax will be 8.76 %.

How is my plan sound? Any suggestions and comments are welcome!

Some questions, may be you know the answer...

1. Can I make partial transfer from SRRSP to SRRIF? (the problem is that I need to pay admin fee if my SRRSP will have balance less than 25K)
2. Can my wife continue to contribute into SRRSP when SRRIF will be open?
3. In several years can I again transfer portion of SRRSP to SRRIF (same ones)
4. Can I withdraw funds first from CAD cash and if not enough from US cash portion of SRRIF? (we are in CIBC IE).

P.S. i don't have DB pension, my wife has. if she continue working until age 55 (I hope very much she won't ), her income will be estimated 24K (have no idea how to calculate est income if she retires earlier)


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## Mike-RetireEarly (Feb 28, 2016)

Although I do agree that it can make sense to withdraw money from your RRSP/RRIF early to avoid the higher tax rates later on, I'm not sure that it makes for you while your wife is working.

First, if your wife makes a spousal RRSP contribution and you withdraw money from your Spousal RRSP/RRIF, then she would then be taxed for that withdrawal, not you. You could withdraw the money from a non spousal RRSP or from your LIRA when you turn 55.

See the following link for the withdrawal rules: https://www.canada.ca/en/revenue-ag...drawing-spousal-common-law-partner-rrsps.html 

Second, I'm not sure that there is any point of your withdrawing money from your RRSP or RRIF while your spouse is still working. I'm assuming that her income of $200,000 is enough to pay for all of the living expenses as well as making contributions to your spousal RRSP and both your and her TFSA accounts. If you don't use up all of your personal tax credit of $11,635 on your tax return, then the unused tax credit can be transferred to your wife instead, so that tax credit isn't lost. If you withdraw some money from your RRSP/LIRA, what would you do with that money? If it's not needed for expenses, you'd just put it into a non registered account. So you're basically transferring money from a RRSP/LIRA to a non registered account. In that case, I'd think it would be better to leave it in the RRSP/LIRA and let the money grow tax free until you both retire.


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## gibor365 (Apr 1, 2011)

> First, if your wife makes a spousal RRSP contribution and you withdraw money from your Spousal RRSP/RRIF, then she would then be taxed for that withdrawal, not you.


Not really. If I withdraw minimum payment from SRRIF, I will be taxedwith lowest tax brackets. There is no attribution rules for SRRIF.



> If you withdraw some money from your RRSP/LIRA, what would you do with that money?


 I won't withdraw money from LIRA/RRSP (maybe in next 4 years from LIRA), but will withdraw from SRRIF, the proceeds I will be puting to TFSA and back to SRRSP (so my wife will get tax break)



> I'm assuming that her income of $200,000 is enough to pay for all of the living expenses as well as making contributions to your spousal RRSP and both your and her TFSA accounts.


 Difficult to say hence she is paying huge taxes up to 54%.... and our spendings over last 5 years varied from 81K to 105K


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## Eclectic12 (Oct 20, 2010)

gibor365 said:


> ... The plan:
> I'm planning to convert my SRRSP to SRRIF in 2019 (so should start process this year) and maybe in 2020 convert my ind RRSP to RRIF, in 4 years to break up my LIRA (I think I can 50% of it to transfer to RRIF, right?).
> 
> The reasons:
> ...



If I have this straight - you are the annuitant on both the SRRIF and SRRSP, right?
Won't taking your withdrawals to give her money to contribute to your SRRSP make the withdrawals attributable back to you?
https://www.theglobeandmail.com/glo...eeling-the-sting-of-the-taxman/article621653/


The tax rates seem to work out as your tax level will lower ... but isn't that defeating the purpose of depleting your SRRSP as well as making it more difficult to avoid the OAS clawback? Or have you calculated that being able to use the tax refund makes it worth the potential taxes later on?

Or is the plan to use the TFSA(s) to cut back the SRRIF proceeds, what is flowing back to the SRRSP a smaller amount?





gibor365 said:


> ... P.S. i don't have DB pension, my wife has. if she continue working until age 55 (I hope very much she won't ), her income will be estimated 24K (have no idea how to calculate est income if she retires earlier)


Check to see if her company provides a pension planning tool. Some are good at allowing estimations of income growth and usually have the early retirement penalties built in. It likely will be a point in time snapshot but should give a good idea of the likely reduced early retirement income.

Failing that ... the pension info (web site or booklet) usually has the age one can retire with a full pension in it as well as the amount the earned pension is reduced for each year early one retires listed in it. 

Check for any bridge benefits or options to buy back the early retirement reduction ... unless the plan is to have a lower payout to enable RRSP/RRIF melting.


Cheers


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## gibor365 (Apr 1, 2011)

> If I have this straight - you are the annuitant on both the SRRIF and SRRSP, right?
> Won't taking your withdrawals to give her money to contribute to your SRRSP make the withdrawals attributable back to you?
> https://www.theglobeandmail.com/glob...article621653/
> 
> ...


I'll try to explain how I understand it .
If I don't switch to SRRIF amd my wife continues to contribute to my SRRSP, value of my SRRSP (and potential SRRIF - in any case I need to convert it at some point) will increase every year ... and potentially , as I become older, my min RRIF payment will go up as well as tax bracket .
If I convert SRRSP to SRRIF, my minimum RRIF payments will deplete value of the SRRIF, and even if my wife put back all of money from my min RRIF payment back to SRRSP, combine value of SRRIF and SRRSP won't increase. And even if she contributes more than I get in min RRIF payments, the combine value wouldn't increase to the same level as if she contributes all to SRRSP. Also, she will get about 50% tax break on newSRRSP contribution.
Another option is TFSA, but I'm not sure what is better , first to max new SRRSP contributions or max TFSA


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## gibor365 (Apr 1, 2011)

> Check to see if her company provides a pension planning tool. Some are good at allowing estimations of income growth and usually have the early retirement penalties built in. It likely will be a point in time snapshot but should give a good idea of the likely reduced early retirement income.
> 
> Failing that ... the pension info (web site or booklet) usually has the age one can retire with a full pension in it as well as the amount the earned pension is reduced for each year early one retires listed in it.


She gets booklet every year...last one from 2016, saying thatif she retires :
55 - she gets $24K
60 - 38K
65- 55K
That's it .....


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## Eclectic12 (Oct 20, 2010)

From the details you list and that it comes every year - this sounds like the annual pension statement.
It appears we are not talking about the same thing.


For the three DB pensions I have been in, the booklet makes no mention of the specific $$ the plan member will get when retiring. It will cover a range of topics including eligibility, contributions, service, vesting, retirement benefits, forms of pension payouts, disability benefits, death benefits and termination benefits. The list may vary a bit.

For my current plan, in the "Retirement Benefits" section there is "normal retirement", "early retirement", "postponed retirement" and "what if I return to work after retiring?".

The "early retirement" section spell out that on or after one's 55th birthday is the earliest one can retire. It then spells out that the calculation is the same as if one retired on one's 65th birthday then be reduced by a percentage per month, back to the early retirement date. So say one retired at age 58 and six months, then there is seven years (12 x 7 = 84) and six months to total 90 months of the reduction factor.


At the end of the day, though - since you are talking about a retirement before age 55, I suspect that if you confirm that the earliest the pension will start paying is age 55 then the annual statement number for age 55 is the one you want. Has this number been climbing each year?


Cheers


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## gibor365 (Apr 1, 2011)

As per statement if she retires earlier 
_You have two options available: 1) Leave your accrued pension in the Plan and receive a future monthly pension when you reach retirement eligibility (i.e. age 55 and older); or 2) Receive the lump-sum value of your accrued pension"_ 
However, there is no any formula to estimate $ value.



> Has this number been climbing each year?


Yes, for example comparing 2016 vs 2014 statements, I see that amount increased for age:
55 by 7.4%, 60 by 6.5%, 65 by 6.6%.


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## redsgomarching (Mar 6, 2016)

wife making 200k + ??!? why do you need our help lol


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## gibor365 (Apr 1, 2011)

redsgomarching said:


> wife making 200k + ??!? why do you need our help lol


for retirement planning


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## OnlyMyOpinion (Sep 1, 2013)

Retirement plan = keep wife :friendly_wink:


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## gibor365 (Apr 1, 2011)

OnlyMyOpinion said:


> Retirement plan = keep wife :friendly_wink:


but apparently she gonna retire too


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## Eclectic12 (Oct 20, 2010)

gibor365 said:


> As per statement if she retires earlier
> _You have two options available:_ *1) Leave your accrued pension in the Plan and receive a future monthly pension when you reach retirement eligibility* (i.e. age 55 and older); ...


Since the annual statement provides the age 55 number for what has been earned, as seen by the numbers for age 55 increasing each year - I believe this is fine to use.




gibor365 said:


> or *2) Receive the lump-sum value of your accrued pension*
> However, there is no any formula to estimate $ value ...


Likely because there won't be access to enough info to make use of it plus most people struggle with the easier concepts of what a DB pension is as well as how to use the general retirement benefit formula.

If you want to dig into it, here are some links.

https://www.milliondollarjourney.com/pension-basics-the-commuted-value.htm
http://www.cia-ica.ca/about-us/actuaries/ask-an-actuary/faq---pensions


Cheers


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## gibor365 (Apr 1, 2011)

> Since the annual statement provides the age 55 number for what has been earned, as seen by the numbers for age 55 increasing each year - I believe this is fine to use.


 Yes, I also thing this is better option... the problem that we have no idea how much she can get if she retires at 45 or 50.... and with her position it's not really appropriate go ask HR such questions


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## Eclectic12 (Oct 20, 2010)

Without having the plan details or being able to ask HR - it is a hard to say. 
I suspect there are two possibilities.

One possibility is that by retiring at say age 45 is that the current credits stay as is but instead of the pension reduction % being applied for 10 years (i.e. age 65 down to age 55), it is applied to 20 years (age 65 down to age 45).


Another is that the reduction stops at age 55 so that the age 55 number on the pension statement is accurate.


Cheers


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## scorpion_ca (Nov 3, 2014)

I wish I had a wife who makes $200k....


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## gibor365 (Apr 1, 2011)

scorpion_ca said:


> I wish I had a wife who makes $200k....


This is smart investment . We got married when she was 19 and 1st year University student....I just saw big potencial


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## fireseeker (Jul 24, 2017)

gibor365 said:


> Starting 2019, my only taxable income will come from HISA/GIC and will be around 9-12K (depends on promo rates). SRRIF payments will be around 7.5K. So, in the worst case, my average tax will be 8.76 %.


Gibor, I'm confused about something. 
First, you don't mention having non-reg funds but say you'll be getting $9-12K from HISA/GIC.
Second, you seem concerned about possible OAS clawback, but unless your RRSPs are enormous it's hard to see how that's possible. Even with $15K in CPP/OAS (which is almost certainly too high given your very early retirement), plus $10K in interest earnings, you'd need another $50K a year roughly from RRSPs/RRIFs to get into the clawback zone. At present, you're talking about $7.5K a year.
Perhaps I'm missing something, but the math seems funny.


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## cainvest (May 1, 2013)

gibor365 said:


> This is smart investment . We got married when she was 19 and 1st year University student....I just saw big potencial


Best retirement/investment plan evar!


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## scorpion_ca (Nov 3, 2014)

gibor365 said:


> This is smart investment . We got married when she was 19 and 1st year University student....I just saw big potencial


You are like Warren Buffet who finds intrinsic value of a human being instead of stock.....

Just out of curiosity...what does she do?


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## gibor365 (Apr 1, 2011)

fireseeker said:


> Gibor, I'm confused about something.
> First, you don't mention having non-reg funds but say you'll be getting $9-12K from HISA/GIC.
> Second, you seem concerned about possible OAS clawback, but unless your RRSPs are enormous it's hard to see how that's possible. Even with $15K in CPP/OAS (which is almost certainly too high given your very early retirement), plus $10K in interest earnings, you'd need another $50K a year roughly from RRSPs/RRIFs to get into the clawback zone. At present, you're talking about $7.5K a year.
> Perhaps I'm missing something, but the math seems funny.


7.5K is only from SRRIF (and this is the first priority as my taxes will be very very low), if I add RRSP and LIRA and with annual 10% RoR (doubt, but possible) + 10K CPP/OAS + interest earning will be higher (let's say 15K), I will be in clawback territory at age 74-75.

But OAS clawback is not a major reason, the major reason that if I deplete SRRIF/RRIF now with very small tax:
- I will be paying much less taxes when I'm 65, getting CPP/OAS and RRIFs min payments
- My wife can deposit proceeds back to SRRSP and getting 54% tax break
- I can invest portions of proceeds to TFSA


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## gibor365 (Apr 1, 2011)

scorpion_ca said:


> You are like Warren Buffet who finds intrinsic value of a human being instead of stock.....
> 
> Just out of curiosity...what does she do?


IT manager with one of the very big financial institutions... and a lot from the total income comes from bonus and RSUs


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