Should I Draw My RRSPs Early To Delay CPP?

[@FINEPOINTSOLUTIONS]

This is a great case study that presents the CPP start date decision very well. Nice work Steve!

[@michaelanthony3776]

I have had several friends and relatives pass away around or just over 65 (preponderance being men ) so take that into consideration....

[@stevebridge4375]

Whenever I hear this point, I always think, "Okay, then spend all of your money right now in case you die tomorrow." The reality is that running out of money later in life is a bigger risk than dying tomorrow. But if you believe the opposite, take the CPP at 60 and live it up today! If you do live past 65, it could be a very meagre existence though...

[@niceguy8305]

​@@stevebridge4375u can always downsize ur house later in life

[@stuartcraig3862]

Really well done and thought provoking. I think that sequence of returns risks is a under-appreciated consideration here. If you have exceptionally good returns in the 5 years prior to your retirement, consider delaying CPP and drawing down your RSP. The reverse is also true, if the 5 years immediately before your retirement lowered your RSP balance, maybe reduce your RSP drawdown and take your CPP on time.

[@SY-lm5ke]

Really top notch information here, extremely well presented and produced. Thanks.

[@misspethamhouse9072]

Excellent video! Really liked the scenarios to help explain the concepts! Thanks!

[@Nap9340]

Have you accounted for OAS clawbacks? I feel that could make a difference

[@willemswealth]

Absolutely. Can't ignore clawback.

[@marcohandmann4843]

You can also delay OAS instead, which makes sense if you didn't yet live 40 years in Canada and it would be reduced anyway. And your survivor benefit is adjusted to if you took CPP with 65, so if you die early, delaying doesn't give your spouse who's outlining you any advantage.

[@pauljose1261]

Excellent video. You are one of the few experts to include the AWI adjustment which significantly increases the potential benefit by delaying CPP to age 70. Most experts only use the 42% which isn't reflective of real world data.

[@garth217]

Yes he used information that most don't even identify, but the reality is most people don't have 3/4 of Million each in RRSPs. Most can't afford to wait until 70

[@willemswealth]

The AIW is a big deal, especially these last few years where wage inflation has outpaced core CPI inflation.

[@samspade1841]

Great content! Have looked at a lot of information on this subject and I think not only did you give a good overview of things to consider but you asked the right questions.

[@monex90210]

One point you and most financial advisors omit is a very very important part. If a husband and wife defer rrsps to age 70 and they melt down all their rrsps. Great from a tax standpoint yes. Lets assume they each now have individual cpp pensions of $1300, then one of them passes away. The maximum pension for the survivor after that is $1364. Do you see a problem. RRSPs depleted and only $1364 cpp + oas to fund retirement. Not saying what you are communicating is wrong but its a scenario many retirees will face

[@colinmagee5155]

Was going to reply with basically the same thing. Variations between 82 and 95 are good to show but, IMO, one of the biggest stress tests any plan should have is, what if one of you dies earlier, say 75. Now can the other live off of what's left for 7 to 20 years if all of 1 OAS and most of 1 CPP is gone

[@Neo1-h7d]

Also let’s not forget the average pension that most Canadians get at 65 is around $800 and not the maximum. So of course many will get below that. So this exercise is not that simple. Definitely not a one approach fits all type scenario.

[@g.belanger8302]

He didn’t advise to melt down ALL RRSPs and be left with only CPP+OAS at 70 (see 6:46 ). The idea is to postpone CPP until 70, requiring using RRSP as income instead to compensate for those 5 years until CPP kicks in. This means you will a lower RRSP balance at 70, and then use RRSP to top up the CPP+OAS income for the rest of your lives.

[@sandray7609]

It could be feasible pulling more rrsp early to top up tfsa. Sure you pay a bit more tax but it grows tax free. Then oas doesn't get clawback and if you need money it comes from tfsa paying lower taxes

[@derekcox6531]

One glaring situation that exists for a large portion of Canadians is simply this: if you are an average earner in Canada,you don’t save much. In fact,an average wage earner actually doesn’t benefit much from the RRSP EVEN IF they manage to put money in one. So,a big chunk of the Canadian working population simply doesn’t have the luxury of delaying Cpp. The average Canadian man lives to about 80 and women 83. High earners benefit from RRSP contributions,but also (often) have the luxury of delaying their government entitlements. Average earners may not have the luxury of delaying Cpp,but more emphasis needs to be placed on HOW to maximize the TFSA for us average folks. The TFSA can be a golden goose even for us!

[@BelAche-99]

Pension Income amount deduction is useful for everyone, even if you are low income and do not have a defined pension, first 2K tax free if you have defined pension income or RRSP withdraw in retirement, almost nothing else counts for the deduction.

[@colin4993]

Working into late 60s and delaying CPP/OAS to 70 is another option if you haven’t saved enough.

[@25Soupy]

The big question is how long is a person going to live. I always thought I would delay both CPP and OAS until 70 and meltdown my RRSP and collect GIS for 7 years before having to RRIF RRSP's. But I did a family tree recently and just found out that the average age of my male lineage is 48.75 years old. I'm already 7 years past due as I just turned 56.

[@DoneByD]

Also you have to be collecting OAS to qualify for GIS so don't think the plan would work anyway. RRSPs will also have a negative effect on GIS eligibility unless you meant to say TFSAs.

[@richardmichael59]

The biggest variable in retirement planning is the unknown factor. DOD. Everything calculation is just speculation without ever knowing when you pass. It’s truly a game of percentages.

[@mattmorris4699]

If a client is known as very nervous about markets and likely to bail when markets inevitably fall they should draw down to get to maximum guarantee

[@dvdvno]

When I was working, some would complain about the extra income tax they paid when they worked overtime. I guess it would be the same for those people in retirement. If you can sustain your lifestyle in retirement, what's the problem?

[@Hdjdkfjahfjjgg]

What if you invest in option income etf's. The benefit of this is that you don't have to sell any of your securities to draw income. Do think its possible not to run out of money with this style of investing?

[@James_48]

Options are most certainly not without risk

[@johnnyv5995]

Great video & very detailed explanation....but not for me. What I personally care about is ensuring I maximize my Go-Go phase to the fullest (no matter the tax/benefits/estate implications) because you never know when the No-Go phase will hit. I would think & hope that retirement means "stop worrying about the future and start enjoying"

[@caperboy1169]

I’m doing it

[@garth217]

Ive seen so many financial videos who suggest that you should delay CPP until 70. But every one of those videos starts off with a couple that has saved $700,000 or 800 k each. The reality is that the average Canadian has only $130,000 in the RRSPs. Thats from statistics Canada. The fact is if you dont have a Million dollars saved in RRSPs you can't afford to wait until 70 .Using statistics data an adult single income to be considered living in poverty is $25,000 / yr. If the average Canadian has 130k in RRSPs x 2 ( 260k) you are clearly living in poverty for 10 years until you reach 70. Numbers are used to match the outcome you want to achieve. I learned this fact in my Statistics class in university.

[@liverpool3469]

Garth, I have to tell you that Statistics class in university that what made sense to me. I am totally agree with you!

[@garth217]

​@@liverpool3469 manipulation of numbers to achieve the goal you set out to prove. I started investing at 28. I don't have 700,000 in RRSPs

[@annashulman4717]

A very good point. I've always felt bad when comparing my savings to those huge video numbers. I will try to delay my husband's and mine CPP to age 65 while retiring at 60. I hope to live this 5 years using our modest RRSP, TFSA and his work pension along with downsizing ( hope to have some money left as a result 🙏 ).

[@billyrock8305]

Yes 👍 Videos around 10 minutes are more effective. ⏰

[@garth217]

Stop giving advice. No one cares what you think

[@niceguy8305]

You make it sound like we all live to 95 ?? Many die at 60 65 70ish. Lucky to make it to 75

[@willemswealth]

A 65 year old couple today has a 25% chance that one of them survives till age 98. That same couple has a 50% chance that one of them lives till age 94. That's a flip of a coin. Lots of good Canadian actuarial studies on this; we refer to the guidelines from FP Canada. One of the greatest risks in a retirement plan is outliving your capital. It's a matter of weighing probabilities. The good news is that if you think you'll pass at 75 (which was a Canadian's life expectancy back in 1980), then you can build a plan to make that zero's out at that time!

[@ianjaeger4178]

XRP XDC

[@analogconversation]

Thank you

[@berry1669]

take you Money while you can - you dont live forever and when you're old [80+] you cant do much anymore

[@jimjackson4256]

You should be able to leave your money in your rrsp and remove your money as you see fit rather than being forced to take out minimum mandated withdrawals whether you need them or not.That would be a real self directed retirement plan.The minimum withdrawal rates are insane at later ages such that by the time you are 90 your retirement funds are pretty much depleted. Being broke at 90 doesn’t sound good.

[@maryanndixon4365]

Just because you are forced to withdraw the amounts from your RIFF does not mean you have to spend it. you can reinvest. keep your TFSA contributions maxed out, invest in quality dividend paying stocks, and you have a tax free income stream coming out of your tfsa, which increases every time the corps raise dividends.

[@jimjackson4256]

@ I was actually talking about the taxes which need to be paid .Yes i know you can spend the money on whatever you want but if you can let it grow tax free for a few years that is better than paying it now.

[@jrroberts7715]

have fun paying the tax man at the end. You would be dumb to not use graduated rates in your favour. Put in when you make good income and pull out with no income. Spread win, compounding growth win, win win double win

[@jimjackson4256]

@@jrroberts7715 I’d like to at least have the freedom to screw up if i want or do you think that the tax system is designed to save you money.?

[@jimjackson4256]

@ I didn’t say anything about not using graduated rates i said you should have the ability to take the amount out any year you want and not have mandated minimum withdrawals.

[@myopinio-m6w]

Delay if you believe your Gov is solvent

[@willemswealth]

Stay tuned for the next video where I cover bunker building, chicken battering, and mattress stashing.

[@tertur2957]

Why would you delay your cpp, oas until 70 and spend your own money rather than the governments? It doesn’t matter what the charts, and spread sheets say, it’s your money take it, and enjoy it. You are not going to live for ever.

[@garth217]

It's not government money ( CPP) .it's your money

[@tertur2957]

@ Exactly, now take it before 70 and enjoy.

[@mstefa007]

So you’re saying: take less money and enjoy it . Why would you want to take more and enjoy it? Did I get that right ?

[@garth217]

​@mstefa007 no you didn't get it right

[@colinmagee5155]

Blanket statements of take it at 70 or take it at 60 are both non-sensical without running the numbers through multiple scenarios and stress tests. Personal finance is just that, personal. And everyone's different financial positions results in different potential plans.

[@Bill-r9z]

Why should you leave money that you paid into for 40 yrs for the government? When you die who gets the money? Nobody unless you have a spouse and the death benefit is $2500. Draw on ccp and oas first. If your rrsp is not depleted before death your family gets it. After taxes of course.

[@JohnHobbs-o3z]

The government will always want you to use your money first,if every one delayed CPP and OAS till 70,the benefit to government would be huge.So i say just take it and spend it forget all the what ifs.Also there are a whole host of other benefits and supplements they would not have to pay out!

[@ismohusu6613]

You think the government takes the CPP leftovers? The benefit might be to future Canadians I suppose who are pulling CPP. The gov doesn't get it.

[@lynnbloom4076]

So if it's better to wait to draw on CPP why does the govt penalize you from drawing it early and reward you for delaying drawing it out . I believe they are doing this for their benefit and not the Canadian citizens .I might be a little darker on this but there is also a theory to use govt money first as they are broke and save your own money for down the road after it falls apart.

[@garth217]

I may be off a bit but the reason is based on life expectancy. CPP is a government administered program not a government agency. You are forced to make contributions during your working life because most people wouldn't save themselves. So they give you your money back at a statistical analyzed rate so that the program doesn't lose money or run out. If you start at 60 and life expectancy is 85 you collect for 25 years. If you start at 70 you will collect for 15 years but at a 42% higher rate. If you live into your 90s you come out ahead..but it's the average that keeps the program going. Some people will live to 100 others to 71 . No one would wait until 70 to collect if it paid the same amount as 60. It's a numbers game so that the program doesn't bankrupt itself.

[@liverpool3469]

​@@garth217 What if there is no difference when to take CPP? You take it at 60 and you live to 100. Or you take it at 70 and you live to 71. If you have large RRSP - you delay. If you have small RRSP - you don't. You can answer this question only when you know when is going to be your last day...

[@garth217]

​@liverpool3469 you make no sense

[@JohnHobbs-o3z]

The government will always want you to use your money first,pension later,and yes it helps the government by far.

[@user-ox4mj6fx5p]

CPP has no relevance to any government going broke. The OAS could be taken away though. They should increase the age on OAS

[@JohnHobbs-o3z]

Here we go 95,most of us will be fertilizer by our mid 80s,this delay discussion always has us living to 150,get real.

[@garth217]

I know someone who delayed until 70 and was still collecting CPP at 132 years of age!!

[@pargolf3158]

@@garth217 CPP must be Corpse Pension Plan in that case.

[@ismohusu6613]

He made that distinction.

[@ChrisMCP2]

All are scam. Evade.