tag:blogger.com,1999:blog-4402283548766807872.post6387226238281736022..comments2024-03-14T19:35:14.456-04:00Comments on The Blunt Bean Counter: The Kid in the Candy Store: Human Nature, RRSPs, Free Cash and the Holy GrailThe Blunt Bean Counterhttp://www.blogger.com/profile/11358868550072516313noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-4402283548766807872.post-46941645188012499622011-03-18T15:11:53.210-04:002011-03-18T15:11:53.210-04:00Hi Anon
You raise an excellent point. As a tax CA...Hi Anon<br /><br />You raise an excellent point. As a tax CA I always try and minimize income taxes, but minimization may also include paying income tax to achieve “income tax smoothing” and thus, as you suggest, you would have been better off cashing your RRSP early to utilize low marginal income tax rates prior to accessing your RRIF and the higher income tax rates you are now incurring. <br /><br />That being said, this blog was really meant to convey that RRSPs psychologically seem to act as a stronger barrier to access than non-registered accounts, but access should not be confused with astute income tax planning. <br /><br />Thanks for raising the issue.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-71339098408086041912011-03-18T13:26:30.558-04:002011-03-18T13:26:30.558-04:00There are sound reasons for early cashing of RRSP ...There are sound reasons for early cashing of RRSP funds. I retired early and I did not touch our RRSP funds but we lived comfortably off non-RRSP equity funds with average capital gains. For 5 years we paid zero tax then the RRIF started and I'm paying 30+%. Too late I learned that I should have been shrinking the RRSP at 20% tax [about $15k/yr] and leaving some of the non-RRSP equity for low tax 'mad' money.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-31632419541816885092011-03-17T11:45:29.389-04:002011-03-17T11:45:29.389-04:00Anon- RRIF's are not counted, since the stats....Anon- RRIF's are not counted, since the stats. were based on RRSP taxable withdrawls, not non-taxable conversions. Also, since the mandatory conversion age for RRIFs is 71, very few people convert before that age as they attempt to maximize their tax deferred savings.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-62412542575420500402011-03-17T09:00:02.058-04:002011-03-17T09:00:02.058-04:00...80% of all RRSP withdrawals are made by individ......80% of all RRSP withdrawals are made by individuals under age 60, generally pre-retirement...<br /><br />RRSPs converted to RIFs wouldn't be counted here, would they?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-45785910347220851722011-03-16T15:46:04.294-04:002011-03-16T15:46:04.294-04:00Sorry I wasn't clear enough...I've only ev...Sorry I wasn't clear enough...I've only ever taken money out through the HBP. I'm firmly of the mind that my RRSP's are sacred. I do, however, plan on using the TFSA as a shorter-term investment vehicle. Current car is paid for, but we're saving for the next one in the TFSA.Kevinnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-16164789424806971112011-03-16T00:05:29.445-04:002011-03-16T00:05:29.445-04:00Hey Kevin
Jamie’s statistics reflect 80% of the 1...Hey Kevin<br /><br />Jamie’s statistics reflect 80% of the 1.9 million actual RRSP withdrawals, not the dollar amounts. Per Jamie’s, these are not his stats. they are from the CRA. <br /><br />Great question about the HBP, I had the exact same thought and asked that question of Jamie figuring that was the flaw in the statistics, but alas, he says both the HBP and LLP withdrawals are not included because they are not part of RRSP income line on the return.<br /><br />If you return to see my answer, I have a question for you? Why as a younger person did you withdraw money from your RRSP? Did you need it financially, did you use it for a trip or car or were you caught up in the Jan/Feb. vortex of advertisements and financial commentators making you think you had to make a RRSP contribution when you really did not have the funds?The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-23638385616976910862011-03-15T21:22:15.193-04:002011-03-15T21:22:15.193-04:00Dear Mr. Bean,
Feel free to ramble.
When Golombe...Dear Mr. Bean,<br /><br />Feel free to ramble. <br />When Golombek talks about 80% of withdrawals, is that in dollar amounts? Also, is there any correction for the HBP? I know I have taken out much more from my RRSP's at age 30 than my parents have.Kevinnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-67600863554313485892011-03-15T07:57:29.649-04:002011-03-15T07:57:29.649-04:00Hey Tony
No problem, I accept the constructive cr...Hey Tony<br /><br />No problem, I accept the constructive criticism, you are not the first person to mention the length of my blogs to me. Before I started this blog, my exposure to financial writing was through financial columns in the Globe & Mail and National Post, I was not even aware of most of the blogs that exist. Thus, when I decided to start my blog, columns were my model for writing. I pre-wrote several blogs for tax season as I will be to busy and mentally tired to write, but once I run through those blogs I will be more conscious of keeping the blogs shorter or I will consider breaking the blog into parts.<br /><br />Although especially with tax, it is hard to explain a concept without greater detail so I still reserve the right to have greater depth and length, hopefully not at the cost of rambling on.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-46230925927334439622011-03-14T22:37:45.384-04:002011-03-14T22:37:45.384-04:00Hey Mark
I really like what you did here with a p...Hey Mark<br /><br />I really like what you did here with a philosophical argument supporting RRSPs as the Holy Grail, very unusual depth for a blog.<br /><br />However, if I can offer some constructive criticism, you could have ended your argument two paragraphs earlier and not lost much. A bit to long.Tonynoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-65776715725719253312011-03-14T18:19:08.707-04:002011-03-14T18:19:08.707-04:00Thank you for the prompt reply - there are other d...Thank you for the prompt reply - there are other details and that is why we have financial planners I suppose. Again, I always look forward to your posts!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-30583268448738097662011-03-14T12:53:20.418-04:002011-03-14T12:53:20.418-04:00Hey Anon:
Thanks for the kind words. I have to wa...Hey Anon:<br /><br />Thanks for the kind words. I have to walk a fine line with this blog in providing specific advice. Even though you have provided personal details, I do not want to provide specific advice on this blog, since if we met in person I may find other details, issues and concerns to take into account that could change my answer.<br /><br />Thus, all I can say is rightly or wrongly, I believe what I wrote, RRSP’s are the Holy Grail or I would be a hypocrite and when I was your age, I tried to build up my RRSP to some extent and pay down my mortgage to another extent. I never considered collapsing my RRSP to pay down my mortgage. However, there are those who may disagree.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-46351885534080586582011-03-14T09:51:09.911-04:002011-03-14T09:51:09.911-04:00home value $525,000
mtg component $280,000 mat Jan...home value $525,000<br />mtg component $280,000 mat Jan2014 (current rate 4.5%)<br />secured LOC $48,000 (prime +1)<br /><br />rsp husband (33yrs old) $40,000<br />rsp wife (31yrs old) $35,000<br /><br />net monthly income $7000<br /><br />Question/advice: would you withdraw all your rsp to pay off LOC and then use the LOC payment to rebuild rsp? currently allocating $1250/mth to LOC<br /><br />Love your blog!Anonymousnoreply@blogger.com