Weekend Reading – RRIF Drawer Art and Mathematics
Dear readers!
It’s almost time for vacation, right?
Welcome to the new Weekend Reading Edition. This edition focuses on some art and math related to RRIF withdrawals, based on my personal reading, questions from readers, and other inspiration.
First, I’d like to share some articles I’ve read recently on my site.
We’ve updated this year-end tax tips post to also include some new facts about the 2024 tax year.
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Maximum RRSP contribution: The maximum contribution for 2024 is $31,560. For 2023, it’s $30,780. The 2025 cap is $32,490.
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TFSA limit: The annual limit for 2024 is $7,000, totaling $95,000 for those who have not contributed to a TFSA since its introduction in 2009 and are eligible for a TFSA. The annual limit for 2023 is $6,500, with a total of $88,000 available. In 2023 for those who have been eligible since 2009.
(Just a few suggestions Make the most of your TFSA, first of all, as much as possible. )
If you want to use your RRSP refund, a TFSA makes more sense
I also wrote about the GIC party ending next year, but these products still have value to offer to your portfolio. depending on short-term needs.
Weekend Reading – Is the GIC party over?
Weekend Reading – RRIF Drawer Art and Mathematics
Unlike some financial experts, I’ve been touting the benefits of RRSP withdrawals for a long time. in front Wait until age 71 for the RRSP>RRIF conversion to take effect when the minimum RRIF withdrawal rate begins.
I am not yet 70 years old. I’m not even close to 70 (since I just turned 40).
Rather, I learned these benefits from others…
Personal finance and investing are always personal, but I believe that being forced to manage your portfolio in any way is usually a bad decision. Successful people told me that.
Here are two important experiences to share from others related to RRSP/RRIF withdrawals.
- Unless the retiree already has very high taxable income.Have large amounts of assets (in the millions) and are already paying high taxes Most retirees or semi-retirees should consider withdrawing at least a portion of their RRSP in their retirement year for “tax smoothing.”
- In addition to RRSP/RRIF income, retirees who have a workplace pension or who may have other significant sources of income after retirement (such as unregistered investments that generate healthy dividends) may either must apply. As you age into your 70s and 80s, forced withdrawals from your RRIF may place you in a higher tax bracket. You could lose your government Old Age Security (OAS) benefits.
One of the inspirations for this week’s theme is from now money sense article:
RRIF withdrawal: What should a senior with a $1 million portfolio do?
I thought this punchline was perfect for this 80-something (Amy) who is dealing with wealth and tax issues.
“In summary, Amy, there is no silver bullet to help your large RRIF account. You will pay high taxes on these withdrawals during your lifetime or upon your death.”
Unless you’re in the minority, each retiree’s cash flow goals are different, but the most successful early retirees and traditional retirees I chat with and interact with are pretty far-sighted on such matters. It seems like he has a plan. choose consistently This is because you will be withdrawing your RRSP well in advance of need.
I’ve observed four important benefits of making financial decisions before you have to make them.
- In the short term, you can take advantage of income sharing opportunities, especially with RRSP > RRIF in your mid-60s, to generate income from the portfolio you worked hard to establish.
- The ability to “smooth taxes” and make choices to minimize taxation while still meeting income needs.
- You have the opportunity to focus your strategic withdrawals in TFSAs (tax-free) or non-registered assets as you wish, the latter potentially being more tax-efficient and favorable for capital growth.
- You can leave a RRIF to your spouse for continued tax deferral, but large RRIFs can be subject to taxes of 50% or more upon your death. This is not an account where you need to hold a lot of assets for estate planning purposes.
Be aware of RRSP and RRIF taxation
What do you think about RRSP or RRIF withdrawals before they are forced to withdraw? Agree or disagree? I would love to read your thoughts in the comments below.
Weekend Reading – RRIF Beyond the Art and Mathematics of Drawers
Liked this post by Patrick Sojka, who shared it. How to choose the right Aeroplan award ticket option To maximize the value of your points.
“Flexibility in choosing travel dates and times, choosing stops instead of direct flights, flying to and from a city, flying on a partner airline, and of course class of service all benefit from Aeroplan Points. It helps us maximize value.”
from joe When you retire by age 40, people ask you what happened to the American Dream. It has disappeared…
Mortgage guru Ron Butler believes that given the US Federal Reserve’s position on moving away from further interest rate hikes, many mortgage rates will be lower in 2024 than they are now. He emphasized that it is likely to decline over time. Canada is likely to follow suit. Time will tell! ?
Mortgage interest rates are on the decline: How far and how fast will they fall?
Canadian bond yields continue to fall today as the US Federal Reserve Chairman completely waives interest rates.
Next week we’ll see all kinds of five-year fixed rates in the 4% range.
Big change
2/
— Ron Butler (@ronmortgageguy) December 14, 2023
COP28 (United Nations Climate Change Conference) recently concluded,…a swift, just and equitable transition, supported by deep emissions cuts and fiscal expansion. ” Let’s take a look.
I would love to see fossil fuel usage reduced, or at least see some tapering, but the reality is that our collective action falls short of any ambition or claim. .
“The United Nations’ recent emissions gap report highlights an alarming reality: current emissions combined with existing policies will keep humanity 3°C warmer than pre-industrial levels. This is in sharp contrast to the 1.5-2°C target agreed in 2015.”
visual capitalist We have released this interesting graphic:
Dividend guy shared his opinion Dividend income portfolio update.
5i research We compared it to Bell (BCE) or Telus (T).
Sadly, Canadians There is approximately $17 billion (not a typo) left on the table to pay fund management fees. Wow! I’m glad it’s not me, and I hope it’s not you!
Save, invest, prosper!
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Enjoy preparing for your weekend or vacation. We’ll be back with more new content soon!
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