Personal Finance

My retirement plan...would like to read feedbacks!

  • Last Updated:
  • Feb 3rd, 2018 6:34 pm
[OP]
Deal Addict
Apr 27, 2015
1806 posts
662 upvotes

My retirement plan...would like to read feedbacks!

Genaral info:
I'm 51 , next year will be fully retired.
My wife 42, working income 200K+.

Assets: in total around 1.5M , split 54% equities, 46% fixed income. my SRRSP, 2 RRSPs(my and wife's), 2 TFSAs, 2 LIRAs, small non-reg (my wife). No debt. Own small detached house in Mississauga.

The plan:
I'm planning to convert my SRRSP to SRRIF in 2019 (so should start process this year) and maybe in 2020 convert my ind RRSP to RRIF, in 4 years to break up my LIRA (I think I can 50% of it to transfer to RRIF, right?).

The reasons:
I want to switch SRRSP to SRRIF, because:
- no attribution rules on SRRIFs, if I take minimum payment (and I intend to take only minimum payments)
- proceeds from SRRIF payments to invest into TFSA and back to SRRSP, thus my wife gonna get 50% tax break (she's obvioulsy in the highest tax bracket).
- deplete value of registered accounts, to avoid higher taxation when I will be in my 60's and start getting OAS and CPP.
- avoid possible OAS clawback.

Starting 2019, my only taxable income will come from HISA/GIC and will be around 9-12K (depends on promo rates). SRRIF payments will be around 7.5K. So, in the worst case, my average tax will be 8.76 %.

How is my plan sound? Any suggestions and comments are welcome!

Some questions, may be you know the answer...

1. Can I make partial transfer from SRRSP to SRRIF? (the problem is that I need to pay admin fee if my SRRSP will have balance less than 25K)
2. Can my wife continue to contribute into SRRSP when SRRIF will be open?
3. In several years can I again transfer portion of SRRSP to SRRIF (same ones)
4. Can I withdraw funds first from CAD cash and if not enough from US cash portion of SRRIF? (we are in CIBC IE).

P.S. i don't have DB pension, my wife has. if she continue working until age 55 (I hope very much she won't ), her income will be estimated 24K (have no idea how to calculate est income if she retires earlier)
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7 replies
Deal Addict
Oct 22, 2015
1327 posts
409 upvotes
gibor365365 wrote: Genaral info:
I'm 51 , next year will be fully retired.
My wife 42, working income 200K+.

Assets: in total around 1.5M , split 54% equities, 46% fixed income. my SRRSP, 2 RRSPs(my and wife's), 2 TFSAs, 2 LIRAs, small non-reg (my wife). No debt. Own small detached house in Mississauga.

The plan:
I'm planning to convert my SRRSP to SRRIF in 2019 (so should start process this year) and maybe in 2020 convert my ind RRSP to RRIF, in 4 years to break up my LIRA (I think I can 50% of it to transfer to RRIF, right?).

The reasons:
I want to switch SRRSP to SRRIF, because:
- no attribution rules on SRRIFs, if I take minimum payment (and I intend to take only minimum payments)
- proceeds from SRRIF payments to invest into TFSA and back to SRRSP, thus my wife gonna get 50% tax break (she's obvioulsy in the highest tax bracket).
- deplete value of registered accounts, to avoid higher taxation when I will be in my 60's and start getting OAS and CPP.
- avoid possible OAS clawback.

Starting 2019, my only taxable income will come from HISA/GIC and will be around 9-12K (depends on promo rates). SRRIF payments will be around 7.5K. So, in the worst case, my average tax will be 8.76 %.

How is my plan sound? Any suggestions and comments are welcome!

Some questions, may be you know the answer...

1. Can I make partial transfer from SRRSP to SRRIF? (the problem is that I need to pay admin fee if my SRRSP will have balance less than 25K)
2. Can my wife continue to contribute into SRRSP when SRRIF will be open?
3. In several years can I again transfer portion of SRRSP to SRRIF (same ones)
4. Can I withdraw funds first from CAD cash and if not enough from US cash portion of SRRIF? (we are in CIBC IE).

P.S. i don't have DB pension, my wife has. if she continue working until age 55 (I hope very much she won't ), her income will be estimated 24K (have no idea how to calculate est income if she retires earlier)
You don't indicate the amount you have in your RRSP or the breakdown of your investments. If it's a large amount you can start winding it down slowly. 51 is still relatively young so if the amount is not large you can wait a little before withdrawing.

You don't have to convert all rrsp money to RRIF at once. So you can have rrsp and rrif accounts open at the same time. It's up to you where the funds from a RRIF withdrawal come from. You just need to make sure the funds are available when it comes time for payment.
[OP]
Deal Addict
Apr 27, 2015
1806 posts
662 upvotes
wra45mon wrote: You don't indicate the amount you have in your RRSP or the breakdown of your investments. If it's a large amount you can start winding it down slowly. 51 is still relatively young so if the amount is not large you can wait a little before withdrawing.

You don't have to convert all rrsp money to RRIF at once. So you can have rrsp and rrif accounts open at the same time. It's up to you where the funds from a RRIF withdrawal come from. You just need to make sure the funds are available when it comes time for payment.
The current value of SRRSP $283K, of RRSP 203K, but the point it (SRRSP) will grow as my spouse maxing it with her room every year
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Deal Addict
Nov 13, 2013
2341 posts
1136 upvotes
Ottawa
For the number crunching it is probably worthwhile talking to a pro. I would look for a fee only advisor to get advice.

My initial thought is I would be surprised if converting so quickly at current interest rates would make sense with most assumptions. With your wife so young and with such a high income that may or may not be stable it is also hard to predict what your needs will be in 20 or 40 years.
[OP]
Deal Addict
Apr 27, 2015
1806 posts
662 upvotes
I would look for a fee only advisor to get advice.
The problem is to find good advisor.... and do you know how much they charge?
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Deal Addict
User avatar
Feb 1, 2012
1364 posts
1815 upvotes
Thunder Bay, ON
The problem is to find good advisor.... and do you know how much they charge?
The author of The Value of Simple has a directory here:
http://www.holypotato.net/?page_id=1332

Money Sense has one:
http://www.moneysenseapproved.com/find-an-advisor

I created a list of questions to ask:
https://www.dropbox.com/s/cshvon4140adw ... r.pdf?dl=0

Select a couple of advisors based on web sites and references, interview the ones you feel best meet your needs.

Cost is probably $2000 to $5000 for a one-time plan for a husband & wife. Sounds like a lot, but with a $1.5M portfolio in ETFs the annual MER would be >$2,000 every year. Question is could you increase after-tax return or save enough in taxes over the rest of your life to offset the cost. Plus the increased confidence that you have not made a wrong assumption or calculation. One advantage they have is planning software like Naviplan that can run multiple scenarios considering taxes for every year of your expected lifespans in an attempt to optimize after-tax return and portfolio value.

Unless of course you prefer to get your advice on the internet from posters like me with usernames that sound like Watergate spies.
:)
I solemnly swear, to never assume I have an inkling at which direction the market will head, and to never make any investments based on a timing strategy.
[OP]
Deal Addict
Apr 27, 2015
1806 posts
662 upvotes
Unless of course you prefer to get your advice on the internet from posters like
:).I'm not seeing here for advise, I'm seeking for flows in my plan :)
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Deal Fanatic
Jul 1, 2007
8443 posts
1490 upvotes
Out of those links mentioned before, Holypotato has the more comprehensive list, I find. Moneysense is just an advertising platform for those advisors who can afford to pay them $500 a month or whatever they charge.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.

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