Today is Family Day in Ontario, so, I had lots of time to read the papers. On the front page of the Business Section of the Toronto Star was an article by Gordon Pape entitled
TFSA or RRSP? Try these five tests. The full article can be found online at:
http://www.thestar.com/business/personal_finance/2013/02/17/tfsa_or_rrsp_try_these_five_tests.html
To summarize, Mr. Pape says there are five tests to determine which one of TFSA or RRSP you should choose. In four of the five tests, a major consideration is the fact that if in retirement, your net income is higher than $70,954 than the government claws back your Old Age Security (OAS).
Oh spare me your selfishness!
Using the RRIF Calculator in TaxTips.ca, I said that the person in the example had $950,000 in the bank and wanted to get at least $70,950 a year from their current RRSP when they turned 71.
The results show that this person will have an income of between $70,950-$81,555 per year until they turn 86.
However, you are entitled to keep removing funds from your RRIF until the age of 91. So, if we take Mr. Pape's money saver and re-calculate his/her withdrawals so that he/she keeps getting withdrawals until the age of 91, and, keeps losing his OAS up until that age, it turns out he actually had $1,280,000 in RRSP's at age 71, and he received an income of between $76,068-$94,464 per year until he /she turned 91.
Does a person who has almost $1.3 million in savings need another $544 per month from Canada, or is the country better off giving that money to people who really need it?
Keep on clawing back Canada, and
Shame on You, Gordon Pape!
