Personal Finance

More Canadians are raiding their RRSPs to buy a house, make ends meet and pay off debt.

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  • Feb 7th, 2017 7:01 pm
[OP]
Banned
Jun 15, 2012
2837 posts
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Saskatoon

More Canadians are raiding their RRSPs to buy a house, make ends meet and pay off debt.

More Canadians are raiding their RRSPs to buy a house, make ends meet and pay off debt
Financial Post - 2h ago
A new survey suggests Canadians are dipping into their registered retirement savings plans like never before and the high cost of housing may be driving those decisions.
http://business.financialpost.com/perso ... y-off-debt
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3 replies
Deal Addict
Jan 20, 2016
2028 posts
1008 upvotes
Houston, TX
ukrainiandude wrote: More Canadians are raiding their RRSPs to buy a house, make ends meet and pay off debt
Financial Post - 2h ago
A new survey suggests Canadians are dipping into their registered retirement savings plans like never before and the high cost of housing may be driving those decisions.
http://business.financialpost.com/perso ... y-off-debt
Finporn at its best ....
Based on 1500 respondents they draw conclusion on whole country, lol.

Moreover, almost half used HBP, which is not a "raiding" but rather SMART move to save on taxes on down payment.
It could be also actually a smart move as well to withdraw your RRSP BEFORE pension age. To avoid osap and gis clawback, for example. This called tax planning, FYI.

But the author seems to be very incompetent in RRDP questions, as he mentioned mythical "tax penalties for early RRSP withdraw". There are NO such penalties, only taxation according to personal situation

Btw, it's also could be a spousal income splitting maneuver which used RRSP withdraw...
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Newbie
Jul 29, 2016
14 posts
2 upvotes
asa1973 wrote: It could be also actually a smart move as well to withdraw your RRSP BEFORE pension age. To avoid osap and gis clawback, for example. This called tax planning, FYI.
Assuming the home buyers are early in their careers, late 20s, early 30s

1. Wouldn't it be smarter to withdraw near the tail end? If you draw early, your create a much bigger impact on your retirement fund because of the lack of compounding.
2. To avoid OSAP and clawbacks, why not just retire earlier, and draw down your retirement fund?
3. Seems risky to assume the retirement benefits are to remain in 40 years. Not only do we not have a growing base of younger generation to support the retiring boomers, wages and quality of work have been stagnant for them. If benefits are going to change, I think the federal government is going to cut down on benefits to balance the budget.
Deal Addict
Jan 20, 2016
2028 posts
1008 upvotes
Houston, TX
AllanHsieh wrote: Assuming the home buyers are early in their careers, late 20s, early 30s

1. Wouldn't it be smarter to withdraw near the tail end? If you draw early, your create a much bigger impact on your retirement fund because of the lack of compounding.
2. To avoid OSAP and clawbacks, why not just retire earlier, and draw down your retirement fund?
3. Seems risky to assume the retirement benefits are to remain in 40 years. Not only do we not have a growing base of younger generation to support the retiring boomers, wages and quality of work have been stagnant for them. If benefits are going to change, I think the federal government is going to cut down on benefits to balance the budget.
I'm not saying one size fits all, but you can mitigate drawbacks of 1-3 by not just withdraw and spend the money, but re-invest them in TFSA. In this way you will not loose compounding. As I also mentioned, with spousal rrsp move you could actually pay no or very little taxes on withdraw (and reinvest in tfsa). In this way you get tax refund, save OAS and Gis eligibility and stay invested :)

For young ppl it could also work if someone hi mat leave or back to school. They could "switch" from rrsp to tfsa virtually tax free (at least first 12k free and next taxed on lowest rate)
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