These 3 Retirement Tax Credits Equal Up To $50,000 Per Year In Retirement Income

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When we talk about retirement planning with our clients one topic that inevitably comes up is tax planning.
Income tax is often the single largest expense in retirement. Larger than travel, food, or medical expenses.
Income tax often comes up when we talk about retirement planning because many people are worried about paying too much tax in retirement and negatively impacting their retirement spending goals.
Many people do not realize that in retirement there are new tax credits that can help reduce income tax, sometimes to zero. It’s understandable that people aren’t aware of these tax credits because they’re mostly available to those over age 65, so they’re not necessarily on someone’s radar if they’re under age 65.
Paying less tax in retirement is nice, but what if you could pay NO TAX at all in retirement? With some pre-retirement planning that is easily possible.
There are three important tax credits that can help you earn over $25,000 per year as an individual, or over $50,000 per year as a couple, and pay zero tax in retirement.
In this video we’re going to look at three important tax credits in retirement, two of which, for most people, are only available after age 65. We’re also going to work backward to craft a retirement plan that provides $75,000 per year in spending with zero tax.
Disclaimer: This video is for educational purposes only and does not constitute investment advice or financial advice. All information provided is for illustrative purposes only and you should not rely on such information as the primary basis of your investment, financial, or tax planning decisions. Every effort has been made to ensure the accuracy of its contents. No representations, warranties or guarantees are made as to the accuracy of any estimates or calculations provided. Nothing in this material should be construed as investment or tax advice, or a solicitation or offer, or recommendation, to buy or sell any financial product or securities. Before making any financial decision, you should review your situation with a financial planner.

[@MeF2023]

Very, very helpful information. I have not seen this information in one vlog, and I have been watching vlogs related to this and retirement & RRSP/RRIF for one year now. Thank you!

[@planeasy]

Thanks for the comment!

[@somai_1]

Can you include examples for single people? Everyone seems to forget we exist, except the government that wants out taxes.

[@renzenker2526]

Thank you! Nowhere else did anyone explain that you the base amount AND age amount at age 65!

[@dancallis3254]

Fantastic information, thank you!

[@planeasy]

Glad it was helpful! Thanks for watching!

[@web3tel]

Great info! But it seems you have not mentioned provincial age tax credit and basic personal amount or did I miss it? Thank you

[@trig33kgirl]

This must be Canada ?

[@adilechavush6284]

This is the best way explain and fits just perfect with my plan.

[@planeasy]

Glad you liked it! Thanks for watching!

[@edhuber3557]

Good stuff, surely, but FOR *CANADIAN* RETIREES.

[@rickbold9337]

Thanks for the great content. Do you have to be living in Canada as a resident for these deductions?

[@1001legoboy]

What country?

[@yo-yohy5680]

I think this is for Canada

[@jws3925]

This is all fine and good but I have two comments: 1) This seems analogous to the car dealer ads who advertise the price of the car if one qualifies for all the programs (first responder, first time buyer, veteran etc.). No one ever qualifies for all the incentives. 2) Could you please post a key to all the abbreviations in the text so those of us who are not familiar with them can refer to it?

[@martik778]

Lets say that couple has 600k in an RRIF and 100k in a TFSA with 100k room left. How should they go about making their income tax free as possible?

[@planeasy]

Very difficult to say, there are so many factors, it depends on age, CPP income, OAS income, pension income, eligibility for GIS benefits, just to name a few. It also depends on the age of the couple, if there is an age gap or not, health concerns etc. Lots of different strategies exist depending on those factors.

[@martik778]

@@planeasy Maybe create a video or blog on this scenario with avg CPP/OAS of 16k each , no GIS or other income age 65-70. A lot of Canadians are in this position with a significant RRIF and looking for strategies to reduce taxes while drawing income and for their eventual estate

[@planeasy]

Great! Will do. I assume full OAS benefits then?

[@martik778]

@@planeasy yes and full (max) TFSA room

[@vladotasev2762]

For OAS it is important how many years you are on Canada. Does GIS aammount depends on years spent in Canada, or it depends only on your other income? Thanks

[@planeasy]

You need to qualify for OAS to be eligible for GIS, so there is a minimum requirement of years in Canada to qualify for GIS, but once you qualify you’ll be eligible for the full benefit regardless of your years in Canada, in fact, there is a GIS top up that will increase GIS for those with less than 40-years in Canada.

[@mike330i]

Is the OAS income taxable? If so, how much would it be in this scenario?

[@planeasy]

Good question, OAS income is taxable, in the video we use $8,251 which is the maximum annual OAS at the time the video was recorded.

[@martymendes1]

Thanks for another informative video. I have a question regarding DB pensions and income splitting. I have asked 2 planners and gotten 2 different answers so you can break the tie. Can DB pension income be split before age 55, or is there an age restriction? I realize most workers are not eligible for DB pensions before 55 but some, Ontario teachers for example, can collect reduced pensions starting at 50. Thanks again and keep up your excellent work.

[@planeasy]

My understanding is that defined benefit pension income can be split at any age as long as you and your partner qualify... www.canada.ca/en/revenue-agency/services/tax/individuals/topics/pension-income-splitting/eligible-pension-income.html#qualify Here is a list of the different types of income that qualify before 65... www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31400-pension-income-amount.html#toc1

[@chippychick6261]

Single retirees?

[@robthesailor]

With a maximum lifetime contribution limit of $88K, please tell me how two investors parlayed their TFSA into over $300K each? You even acknowledged $150K as a more reasonable number in your video - but you did not use it in your example. Using unrealistic numbers to "wow" the viewer, makes you lose credibility as a financial planner in my mind.

[@planeasy]

This is an example of what is possible in the near future. Those retiring in 10-15 years will easily have TFSAs in the $200k to $400k range. Plenty of clients already have TFSAs of $150k or more if they’ve maximized it from the beginning in a well diversified portfolio.

[@420troll4]

what are you doing to maximize the returns on your tfsa investments? you're not just letting it sit there in cash are you??

[@Dingeraye1]

Yah. I thought this very thing. But, he is correct for someone who has a ways to retirement. I wonder how long it will take the Government to plug this hole? They just tagged a guy who had a massive TFSA for taxes because, they said, he was "running a business".

[@scottm2527]

@@Dingeraye1yeah. Day trading in a TFSA is a no-no

[@marcleblanc6293]

What good are tax credits when you dont get enough to live on to begin with?

[@wanderingsoul2909]

Where in this video or description does it say that this is for Canadian Taxpayers ONLY ?

[@CowboyPants-h5p]

It doesn't say anywhere. Not a very smart thing to do, imo.

[@missouri6014]

If you’re going to have this channel in the US then you should state what country that you’re talking about in the video because this waste of my time

[@LivingRetirement]

I already was wondering what those terms are, other than "Pension". I agree.

[@mikehassard8089]

The web address listed under the comments is .ca = Canada.

[@Lizmcb]

You're not wrong but (sorry) this cracked me up a bit, as this is exactly the problem Canadians have all the time when looking for online info on just about anything.

[@chippychick6261]

Do you have CPP or oas in the us?