0:00

You're listening to a frequency podcast.

0:02

Network production. If.

0:05

You're anything like me. There.

0:07

Have probably been times over the

0:10

past couple of years as we've

0:12

struggled with affordability. That. You've

0:14

looked at your R R S P.

0:17

Maybe. in a couple of different ways. First.

0:20

Can. I even afford to contribute

0:23

to this thing. Or is this

0:25

money better spent? On the

0:27

daily costs of living. Or.

0:31

Second, I can't

0:33

afford to live right now. Can.

0:35

I take money out of my R R

0:38

S P. So. I can afford

0:40

to. Fix my car,

0:42

pay my mortgage by my

0:44

groceries, We're.

0:46

Told that contributing to R S

0:49

P's is one of the best

0:51

things we can do to prepare

0:53

ourself for stability later in life.

0:56

But. When life is unstable now.

1:00

We. All have to make some choices. So.

1:03

Today. We'll. Explore.

1:06

The. Good. The. Bad and the

1:08

ugly. Of. Managing. Our

1:10

our our as peace. Enjoy!

1:15

The should I put my savings into an R

1:17

S? P: How much. If I put my

1:19

money into an R S P, do I pay

1:21

less taxes? What are do if I want to use

1:23

the money and my R S P before I retire? The

1:26

deadline for filing your taxes is fast

1:28

approaching. it's the end of this month.

1:32

And you've probably heard a lot

1:34

of talk about our as kids,

1:36

but how exactly do they work

1:39

and what is the best way

1:41

for you to use them in

1:44

this economy? I'm

1:49

Jordan. He throws things and you are

1:51

listening to in this economy where we

1:53

help you understand the systems that create

1:56

your money problems. That's. Everything

1:58

from grocery bills to mortgage

2:00

renew Those two are are

2:02

as P contributions or withdrawals

2:04

and everything in between. Now.

2:07

This is an episode where we

2:09

don't focus on a single listeners

2:11

problem because we've gotten so many

2:13

requests on different aspects of this

2:15

topic and because I have my

2:17

own questions to. So. I

2:20

mention this, but not to stress

2:22

you out or anything Canadian income

2:24

taxes are do at the end

2:26

of this month and if you

2:29

read your tax return closely. You'll.

2:32

Notice that line thirty six as

2:34

the R R S P deduction

2:36

live. I'm familiar

2:38

with that line because for so

2:40

many years, I had to write

2:42

a zero in there. And I

2:45

don't anymore. But. It wasn't easy.

2:47

Over the past few months we have received

2:49

a bunch of emails about our Sps people

2:52

wondering if they can dip into there are

2:54

as piece to tide them over during a

2:56

tight month. Or wondering how

2:58

much they should be contributing each

3:00

year in order to retire comfortably.

3:03

For. All that and more we went

3:05

to Jackie Porter. Who. Is a

3:08

certified financial planner and an ambassador

3:10

for As P Canada, a not

3:12

for profit organization that aims to

3:15

educate Canadians about their financial choices.

3:18

We. Started out. By. Asking her

3:20

a basic question. What? Is

3:23

an R R S P. So.

3:25

Far as keys. Register Retirement Savings

3:27

plans are one in the same.

3:30

So. They are an opportunity

3:32

for you to. Hear. The

3:35

government a heads up that you're going to be

3:37

contributing some fans for. Your achievements and

3:39

in doing. So you'll.some awesome sex

3:42

addicts and you'll have your money

3:44

grown sanctuary for as long as

3:46

it's invested. And it's a deal

3:48

he should be invested so your

3:50

retirement. it's just all about trying

3:52

to make the most of for

3:54

where your money in that such

3:56

sheltered and i am. I see

3:58

a maybe just put it. The record here cause

4:01

I know this can confuse some people.

4:03

When you put it into an R

4:05

S P, it is still your money

4:07

and you can still withdraw it, right?

4:09

It's just complicated and potentially comes with

4:11

politics. That. The been sunday

4:13

with the on that so belongs to

4:16

you. The up you're giving the government

4:18

is your intention is to leave it

4:20

for retirement but you know life happens.

4:22

Sometimes people need to take money out

4:25

for different reasons and depending on how

4:27

you take it out there might be

4:29

penalties. Or. There might

4:31

be opportunities to withdraw it without having

4:33

to pay taxes. It's really important that

4:35

you walk into those options and determine

4:38

if it's still worth your while to

4:40

withdraw and will get into those options

4:42

in a minute. But first I mean

4:44

listen, this economy can be a horrible

4:46

for some people, but maybe let's start

4:48

optimistically with a best case scenario. If

4:51

everything is okay how should are

4:53

as peace figure in to the

4:55

average person's you know annual financial

4:57

plan and budget. Yeah. I

4:59

think people should consider and earth p.

5:02

An. Opportunity for them to save

5:04

for the long term. So how

5:06

does it? Didn't ask yourself. If.

5:08

You're saving. Lives talk about

5:11

now What's important for you in this

5:13

moment? As you said, the economy has

5:15

have. Souls. You're thinking about

5:17

you know of the than that has

5:19

happened since in the last few years

5:21

grocery prices going up in place and

5:23

going up interest rates going on. You

5:25

have. That. Would be the

5:28

first them. Are you playing Sat

5:30

on credit cards? Are you

5:32

struggling to make those payments? Paying

5:34

off debt should be your priority.

5:36

Maybe you haven't A mortgage that

5:38

might be coming up for renewal

5:40

and you're concerned about he? Okay,

5:42

not off. Those things are important,

5:44

so prioritize. Say now that think

5:47

that pizza for or the money that

5:49

you have club in yen and consider

5:51

the my you have going to say

5:53

you know if something happens when I

5:56

have enough to cover my bills so

5:58

maybe or someone worried about. Being

6:00

full time employment needy, you're concerned about

6:02

the volatility maybe in your job i

6:04

know number of my clients, your and

6:07

sack of got laid off and it's

6:09

all about why we're talking about what's

6:11

funny and what's going out, What it

6:14

costs you to live in understanding what

6:16

those foster is. Having a emergency food

6:18

is really important. And so

6:20

an emergency fund is basically or been a

6:23

cop is something comes up and you can't

6:25

pay your bills for a month or a

6:27

big bill comes out of nowhere he's got

6:29

access and still that should be are certain

6:31

your second or first priority is how much

6:33

data I have any to pay that off

6:36

that been and you know really actually eat

6:38

away at any opportunity I have to save

6:40

in the future the more debt I have

6:42

you I have the for said to pay

6:44

for emergencies that might some up a bill

6:47

and that of new aware of course I

6:49

got laid off so. Building as three

6:51

to six month christian would be

6:53

the second thing and then the

6:56

third thing would be putting money

6:58

away for retirement or ashamed or

7:00

something like that of more longer

7:02

intermediate I'm with a five year

7:05

term Horizon I mentioned are saying

7:07

because there are opportunities to withdraw

7:09

from the R S P. E

7:12

s your bags with. So. It's something

7:14

to consider for those of you out there

7:16

who are thinking about how you'll save for

7:18

home. It is getting more and more challenging

7:20

using the Rs. She is a great way

7:22

to do that and then you'll be able

7:24

to take it out. Without. Having to

7:27

pay the tax. And have all those

7:29

penalties and then you're able to also

7:31

gets. On

7:33

how much. So. That was

7:36

the best case scenario. Pay off debts,

7:38

you get yourself a nice little emergency

7:40

questions so that you can survive anything

7:42

that comes up unexpectedly and then you

7:44

start contributing to your Rsp. Lots of

7:46

people aren't in that situation and are

7:48

looking at best, are listening to this

7:50

and thinking like I'm never gonna be

7:53

able to do those things and retirement

7:55

is a million years away should those

7:57

people just forget about it for now.

8:00

Those kinds of circumstances are creeping up

8:02

on more and people feeling I know

8:04

a lot of millennials worry they'll never

8:06

be able to buy a home as

8:08

good as it is a concern. And

8:10

even better, the has a consume so

8:12

I wouldn't write off. Saying. That

8:14

you know never will be the right

8:16

thing and to make contributions to an

8:18

arse p That's all about how much

8:20

income you earn because keep in mind

8:22

that say you know him from the

8:24

more taxes you play and the more

8:27

my the you just give away to

8:29

the government is you don't make an

8:31

hour is t contribution on There are

8:33

also people who might be going to

8:35

school having to find their education and

8:37

eighty you increase your I. You're thinking

8:39

I'm going to take this program after

8:41

like maybe I'll take a part time

8:44

programs. You up my skills so

8:46

I to require. And so

8:48

are his keys are opportunities that you

8:50

can check me out if you put

8:52

money in an Rfp and take it

8:54

out or something like our educational program.

8:57

So I think consider your circumstances, how

8:59

much income you earn, what you're trying

9:01

to achieve to determine if our as

9:03

keys to make sense that does Nothing

9:05

makes sense for everybody if you're trying

9:07

to save for an emergency and ours

9:10

p is definitely not the best way

9:12

to look after saving money. So think

9:14

through what your circumstances are, cheap it

9:16

on the radar. One. Last whole

9:18

thing I want to add about our he

9:20

has the younger you are, Where'd you grow

9:22

money for the long term? Some.

9:25

More powerful since I have had been

9:27

switched to be. So even if you're

9:29

putting twenty five dollars away because that's

9:31

all you can afford to put away

9:34

right now, don't underestimate the impact that

9:36

money contending not so ten years, twenty

9:38

or or thirty years are talking Right

9:40

now you think people that's the power

9:43

of com headed for some more time

9:45

management compound and grow the more money

9:47

will be available. So you might not

9:49

have sauce on your side but you

9:52

have to use on your side. You

9:54

have. time count on the underside

9:56

something that somebody who has even

9:58

older trying to say That's

10:01

really good advice and if anybody's in

10:03

this position now, whether they're, as you

10:05

say, looking to put away 20, 25

10:08

bucks a month or a few hundred or more than that,

10:11

what do you advise they look

10:13

out for when they're deciding what

10:15

kind of RRSP to start, where

10:17

to start it, all of that

10:19

stuff. I mean, especially if you're

10:22

not aversed in that

10:24

world, it can seem really intimidating.

10:26

Yeah, I consider how soon you're

10:28

going to need the money. Consider

10:30

how you feel about losing money

10:32

in the short term. Also

10:35

consider, I mean, and these are now I'm

10:37

talking to the cryptocurrency people in the room

10:40

listening. I just think,

10:43

how much do you understand what you're

10:45

investing in? Because sometimes

10:48

not knowing and understanding

10:50

an investment can really hurt you.

10:53

So if someone does not want to

10:55

spend too much energy trying to figure

10:57

out what should I do with my

10:59

money, exchange train

11:01

of funds, ETFs are great

11:03

places to buy a diversified

11:06

amount of investments, pay little

11:08

fees and kind of set

11:10

it and forget it because you're buying the market.

11:12

You're not trying to out-best the market. So

11:15

where do you go with that kind of stuff? You go

11:17

to your local bank, you go to credit unions. Talk

11:20

us through the process of deciding what

11:22

RRSP to tackle. Yeah, I think

11:24

if you can find a

11:26

financial planner or an

11:28

investment advisor who is a broker

11:31

who can offer basically a broad

11:33

group of investments to choose from

11:35

and then walk through

11:37

that process of thinking, I'm

11:39

thinking of using this investment

11:42

in the next one to two years or

11:44

one to three years for some things. So

11:46

I don't necessarily want to tie it up

11:48

in anything too risky. Typically

11:50

an investment advisor or financial planner will

11:52

do something called a risk tolerance questionnaire,

11:55

even if you set up one of

11:57

those self-directed investments during any time. of

11:59

those online brokerage firms. So there's a

12:01

number of brokerage firms out there. If

12:04

you're looking for online investments, you can

12:06

Google online and set up an online

12:08

investment account, or you can, you know,

12:10

speak to a banker and ask to

12:12

speak to an investment advisor who has

12:14

access to broker investments, so you don't

12:16

have to be in one type of

12:19

investment. And then the other option is

12:21

to search. FP Canada has

12:23

access to a diversified group of advisors

12:25

that you can choose from, and you

12:27

can speak, select someone that specializes in

12:29

investments. So it just kind of depends

12:32

on what you're looking for, but the

12:34

process is going to be the same.

12:36

You're going to have to fill out

12:38

something called an investor risk tolerance questionnaire.

12:41

So the company you're working with understands

12:43

how much you understand about the market,

12:45

how comfortable you are with risk, and

12:47

when you'll need the funds. Quick

12:52

sidebar here. Jackie mentioned

12:54

an organization called FP Canada just

12:56

now, which offers financial

12:58

literacy resources to Canadians. I'm

13:01

an ambassador for FP Canada, and it's

13:03

an organization that represents financial planners who

13:06

do something called independent financial plans. And

13:09

so they are organizations that

13:12

work with the public who are

13:14

trying to understand how they can

13:16

become more financially literate, and they

13:19

offer financial planning services to basically

13:21

Canadians. FP Canada is a not-for-profit,

13:23

and they offer free 30-minute consultations.

13:26

There's a link to them in our show notes in

13:28

case you want to check them out, and maybe you

13:31

find their services useful. Okay, back

13:33

to those RRSP contributions. So

13:36

now we're up to the point where,

13:39

presumably, someone has made a decision about

13:41

risk tolerance and where they're going to

13:43

place their money. How much should

13:45

you put in? When should you put it in? What

13:48

are the kind of best practices

13:50

for maximizing the value of what

13:52

you're contributing? So how much you

13:54

should contribute? I mean, typically, a good rule of

13:57

thumb is that you're in a position to save

13:59

at least one. these 10% of

14:02

your, the amount that you

14:04

earn towards long term, that's

14:06

at least a great place

14:08

to start. The other

14:11

thing that you can do is just

14:13

that even back of an action scenario

14:15

because you're writing down all the

14:17

income you have coming in and writing down

14:19

all the expenses you have. There are lots

14:21

of budget apps available these days that allow

14:23

you to kind of see how much you

14:26

actually have to work with. It's

14:28

also a really good starting point to

14:30

just figure out where you are financially

14:33

and maybe things, if your priority is that you

14:35

do want to save, where you can

14:37

come back to achieve the financial goals

14:39

that you set for yourself. So if you've

14:41

never done that exercise, I encourage you to

14:44

do that. And then really

14:46

in terms of best practices, set up that 10%

14:48

if you can. I

14:50

highly recommend that people set it and

14:52

forget it in terms of creating automatic

14:55

monthly contributions to things so that they

14:57

don't have to think every month, oh,

14:59

how much should I save? If

15:01

they're automatically contributing, they're much more likely

15:04

to achieve their goals and live

15:06

on what they have left. So setting

15:08

up a monthly contribution once you figured

15:10

out your budget and then on a

15:12

regular basis challenging yourself to see if

15:15

you can save more towards some of

15:17

your financial goals, whether it be to

15:19

putting it into your RSP or just

15:21

saving overall. Challenge yourself

15:23

as much as you possibly can because it's

15:25

always easy to just decide, I can't, and

15:28

this is the thing that I see with

15:30

clients. I have no idea

15:32

how I can actually save for the things

15:34

I need. And sometimes you might

15:36

need assistance and that's kind of where Financial

15:39

Planning, FP Canada, the

15:41

financial planning organization I talked about

15:43

comes in. We do offer typically

15:45

the advisors that will offer 30

15:47

minutes for people to get financial

15:49

advice. Otherwise, check out if

15:51

you're someone who's motivated to do this

15:53

on your own, check out those budget

15:55

apps and budget programs, even a spreadsheet

15:57

just so you know exactly where And

16:01

then really push yourself to say

16:03

the best you can for the future. If someone

16:05

is a little bit older, I can say the

16:07

future comes sooner than you think. Fast forward a

16:11

little bit in our

16:14

hypothetical, you've decided on your recipe, you've started to put money

16:16

into it and all of a sudden life happens. The

16:21

last couple of years of the economy

16:23

happens, your mortgage needs to be renewed.

16:25

You need to buy a new car which is outrageous. You

16:28

need to pay for it. You need

16:30

to pay for it. You need to

16:32

pay for it. The last couple

16:34

of years of the economy happens, your mortgage needs to

16:36

be renewed. You need to buy a new car which

16:38

is outrageous at this point in time. Can

16:41

you take money out of your RRSP

16:43

and explain exactly what happens when you

16:45

do that? So there's two programs you

16:47

can take money out of your RRSP for. One

16:50

is the homebuyers program and

16:53

you can take up to

16:55

$35,000 under the homebuyers program

16:57

out for a home purchase.

17:00

You get 15 years to

17:02

pay back that homebuyers loan.

17:04

If you take money out

17:06

for a pursuit

17:08

of a 20 hour at least

17:10

study program, you can take

17:12

the money out of your RRSP under the

17:14

lifelong learning program and you've got

17:16

10 years to pay that back. And

17:19

the maximum you can take is $10,000. So

17:22

under those programs, you're able to take money out 10

17:24

years or 20, 15 years to pay it back. There's

17:28

no penalty if you take it out under those programs.

17:31

And then you have the ability to

17:33

invest in the RRSP and worry that

17:35

the money that you're saving, you won't

17:37

be able to access. Given the

17:39

current hosting market in this country, $35,000 seems so

17:41

low. I

17:44

know. I know. I 100% agree they

17:47

have come up with new programs over

17:49

and above the homebuyers program that helped.

17:51

There is a program that just came

17:53

out last year and it's

17:56

for new homebuyers as well

17:58

to access. another 10 grand

18:01

a year, that's still only 45,000 dollars.

18:05

I know it's not gonna help if you're

18:07

trying to buy a house in the GTA.

18:09

It is a start, but I hear you,

18:12

it's still relatively unaffordable for pretty

18:14

few people to get into a home

18:16

based on some of these programs that

18:18

are out there. Having

18:20

said that, if you are in a

18:22

scenario where you put money in an

18:24

RSP and you can't take it out

18:27

because, sorry, you need

18:29

to take it out because life happens,

18:31

then the option there is

18:33

to withdraw it and

18:36

it all depends, folks, on

18:38

how much you withdraw. So if you

18:40

withdraw money out of the RSP, over

18:45

5,000 dollars. So if you withdraw

18:47

4,999, you're okay, but

18:50

if you borrow five, like 4,999, you're

18:54

just gonna pay 10% withholding taxes on

18:56

the money that you withdraw. If

18:58

you take more than 5,000 or more, you're

19:03

gonna pay 20%. If

19:05

you take over 10,000, you're

19:08

gonna pay 30%. And

19:11

30% is what you pay over 10,000 of

19:15

withdrawals from your RSP. So the number is

19:17

pretty, like the withholding taxes, which is all

19:19

the credits, by the way, that you would

19:22

have ever seen from the government. You pretty

19:24

much lose the tax credit, the tax refund

19:26

to that. And then the

19:28

other part that you need to consider is

19:31

all the money you withdrew is

19:33

gonna get added back to your income. So you're gonna

19:35

be taxed on it again as income? As

19:37

income, wow. So here's the hack, because

19:39

I've had clients who they've gotten laid

19:42

off, they weren't prepared, they took money

19:44

out of their RSP, but

19:46

they were confident that they'd be able to get

19:48

a job to follow me there. Like, so what

19:50

did they do? They took, you know, let's say

19:52

they took 10,000 out of

19:54

their RSP, but prior to the

19:56

end of February, because they got a job,

19:59

they were able to. take a loan,

20:01

an RSP loan, or they saved up

20:03

some money, maybe borrowed somewhere else, and

20:06

put that $10,000 back in, so

20:09

it wouldn't impact their tax

20:11

circumstances. So

20:13

it just kind of depends. I'm just giving

20:15

you a hack in the event that life

20:17

happened, but the bottom line is there are

20:19

penalties associated with taking money out of the

20:21

RSP. They're pretty hefty, you just don't pay

20:23

the tax refund back that

20:26

the government gave you, and you're going

20:28

to end up having that income added back to your

20:30

income. So if you have no choice,

20:32

you have no choice, so consider that

20:34

when you make the RSP contribution, and

20:37

then if you're able to before the end of

20:39

the tax RSP deadline,

20:42

usually February 28th or March

20:44

1st, if you can put that

20:46

money back into your RSP, then it won't impact you.

20:51

Have we seen over the past couple

20:53

of years an uptick? Have you seen

20:56

it in people unfortunately having to dip

20:58

into their RSPs just for things like

21:00

mortgages and groceries? Thankfully,

21:02

I haven't, but that doesn't mean it's

21:04

not happening. I do know overall, Canadians

21:07

are hurting more. Unfortunately, there's a lot

21:09

of debt that they're carrying, and also

21:11

is trying to pay bills because on

21:14

top of that inflation is not. So

21:16

groceries, all these additional expenses have gone

21:18

up, for people gas has gone up,

21:21

and so on top of that, they're

21:23

carrying a pretty high debt load, and just

21:25

unfortunately, their income hasn't necessarily

21:27

kept up with anything. The reason

21:29

I asked that question is because there might

21:31

be some people who have a

21:33

limited amount to save. They're doing okay,

21:36

they're struggling in this economy the way

21:38

a lot of people are, but they're

21:40

in that position where they have something

21:42

to contribute, and they know that it's

21:44

a smart idea to do it, and

21:46

they wonder if, given the

21:48

fact that everything feels so precarious, they

21:51

might be better instead putting that money

21:53

in a tax-free savings account. Can

21:55

you just quickly explain how people make

21:57

those decisions and what the differences are?

22:00

especially in terms of being able

22:02

to react to changing circumstances. Indeed

22:04

and yeah I emphasize because I you

22:06

know get it it's challenging out there

22:08

for the reasons I've just said and

22:10

come largely are kept up

22:12

with the cost of

22:15

everything. So if you're someone who

22:17

is trying to decide should I

22:19

make an RSP contribution, should I

22:21

make a TFSA contribution, consider you

22:23

know do you have any concern

22:25

about job security, do you have

22:27

an emergency fund that

22:30

if you didn't have an emergency fund

22:32

something happened you would be more

22:34

likely to take that money out of an RSP

22:36

and have to pay those awful

22:38

penalties I've talked about because the

22:40

big difference between an RSP and

22:42

a TFSA is you don't

22:44

have any tax to pay if you

22:46

withdraw the money out of a TFSA.

22:49

There's no penalty to pay. The

22:51

only thing is you lose the ability for that

22:53

money to compound and grow but largely

22:55

the money goes into the TFSA there's

22:58

no tax you don't get a tax

23:00

refund you don't get a tax credit

23:02

but the money grows tax free and it can

23:05

be withdrawn tax free. With

23:07

RSPs the money goes in and you

23:10

get a tax credit but you withdraw

23:12

it you have to pay hefty penalties

23:14

if you withdraw it and

23:16

you have to pay all of the taxes.

23:20

You also have to have that income that

23:22

you took out from the RSP so whatever

23:24

with money whatever amount you took out from

23:26

the RSP is also added to your income.

23:29

None of those things happen in a

23:31

TFSA but you don't get the tax

23:33

credit either but you just kind of

23:36

have to weigh how badly do I

23:38

need that money if something happens. Do

23:40

I have enough of a security blanket

23:42

as far as money and an emergency

23:44

fund? Do I earn enough

23:46

income that it would

23:48

make an RSP worth living out?

23:51

RSPs tend to be better for

23:53

people earning at least you know

23:56

late 50's and maybe 57, 58,000 or more. So

24:00

if you're earning, you know, if you're

24:02

kind of on the cusp that you're earning 60,000 or

24:05

less, you know, you might be on

24:08

the cusp of whether or not it makes sense

24:10

to make an RRSP contribution and it would be

24:12

worth it to have a conversation with, you

24:14

know, a financial planner or an advisor

24:16

to see if it's doing something that

24:19

you should consider. But consider your end-game

24:21

credit bracket because the people who benefit

24:23

the most from RRSPs are people in

24:25

higher tax brackets. So for example, if

24:27

you're someone who earns, you know, let's

24:30

say the highest tax bracket. If you're in a 54%

24:33

tax bracket, for that we know you put in

24:35

an RRSP, you're getting 54 cents

24:37

back. If you're someone who's in a lower

24:40

tax bracket, so let's say you're someone who

24:42

earns 60,000, you

24:44

might only be getting closer to like

24:46

3 cents back. So you just

24:48

kind of have to look at if it

24:50

even makes sense for you or would the

24:52

money be better served where you can get

24:54

at it without having to just having to

24:56

deal with penalties. Okay, so here's

24:59

my last question and it's about the

25:01

ultimate end-game, which is

25:03

retirement. What happens when you

25:05

decide you're ready to retire and use

25:07

that money? And you know,

25:09

retirement is kind of a nebulous term, you

25:12

know, I could quote unquote retire. Well, I

25:14

can't afford to, but I would love to

25:16

quote unquote retire in a few years. Could

25:18

I still access my RRSP? Would there be

25:20

penalties? Do I have to wait till I

25:23

hit a certain age or certain qualifications or

25:25

what? Retirement in this country

25:27

at the moment means you can

25:30

begin the process of taking money from

25:33

your RRSP or what they call turning

25:35

it into, instead of our registered retirement

25:37

savings program, turning it into a registered

25:40

retirement income fund. Don't know if you've

25:42

heard that term before, RIF. So

25:45

a RIF is basically when

25:47

you make the decision to

25:49

turn your registered retirement savings plan

25:51

into a plan that's going to give

25:54

you income. When you do that,

25:56

what happens is the government looks at

25:58

your age. you can start

26:01

to risk by as early as 55,

26:03

you get a lower amount as income

26:05

because the goal of the registered retirement

26:07

income fund is to last to you

26:09

until you're at least 85. So

26:12

they're pro rating it over how long they expect you to live?

26:15

Exactly, based on life expectancy and so

26:17

those numbers keep changing every year but

26:19

in a nutshell you can start

26:21

risking as early as 55 and you get a

26:23

percentage based on your age and

26:25

it goes out each year based on

26:27

your age and then that income that

26:29

you receive that is the amount you'll

26:32

pay taxes on when you file your

26:34

income taxes. You won't have to pay

26:36

that huge withholding tax penalty, just the

26:38

income penalty. How much did that income

26:40

generate in taxes at the end of

26:42

the year and then that's the tax

26:44

you'd be expected to pay when you

26:46

file your taxes. Do you

26:48

recommend that people take it out right at 55? Does

26:51

it make a difference? I mean I'm assuming if

26:53

you wait obviously the individual payments are higher and

26:56

actually here's my real question. What

26:59

happens if you access it and you set

27:01

up and start riffing at 55 and

27:04

it's not enough and at 60 you need to go back

27:06

to work and you un-retire? I can't

27:08

emphasize enough why figuring out

27:10

your retirement readiness and looking at

27:13

how a financial plan can help

27:15

you figure out how much you

27:17

actually need to retire and also

27:19

figuring out you know when's the

27:21

best time to start taking those

27:23

rough payments because nothing's worse than

27:26

outliving your savings. So one

27:28

of the questions that a retirement plan

27:30

or a financial plan seeks to answer

27:32

is will you outlive your retirement savings

27:35

and I think for people who

27:37

are serious about their retirement the

27:40

most important thing is to make sure your

27:42

plan is resilient so you don't have that

27:44

scenario where five years later you didn't realize

27:46

that you didn't have enough saved and you're

27:48

going back to work. Nothing wrong with working

27:50

but it's always better to work because you

27:52

want to because you have to. And just

27:54

to be clear they won't stop your payments

27:56

because you have to go back to work

27:58

there's no like technically you must stay retired

28:00

thing here? Not at all.

28:02

It's really more about the longevity or the

28:05

resilience of your asset. The

28:07

retirement plan will say, well, how much will

28:09

you need to live and how much will

28:11

you be able to get out of your

28:13

investments and how long will they last? So

28:15

understanding that will give you a lot more confidence when

28:18

you decide, okay, I'm ready to retire now. Cause I

28:20

know I have enough. Jackie,

28:22

thank you for this. Uh, I've learned a ton.

28:24

I'm sure our listeners have too. And I will

28:26

say I can think of one thing worse

28:29

than outliving your investments. What's

28:32

that? Dying. Well,

28:35

you know, I always say it's either, you

28:37

know, your investment died before you did, you

28:39

died before your investments, but you know, not

28:41

great, but at least you're

28:43

dead. Jackie

28:48

Porter, a certified financial planner.

28:51

Thank you so much to Jackie for sharing her

28:53

expert knowledge with us. You can

28:55

find more information about her services by visiting

28:58

us, Jackie, that's J A C K I

29:00

E dot C A. And thanks to all

29:02

of you who wrote in to suggest this

29:04

topic. If you did just know you

29:07

were not alone. Clearly in this

29:09

episode, we mentioned an organization called

29:11

F P Canada. They are

29:14

a nonprofit that helps Canadians with their

29:16

financial planning. You can find out more

29:18

about them at F P Canada

29:20

dot C A. Now,

29:29

if you have a money problem or even

29:31

just a question about how finance works, about

29:33

how the economy works, something you're wondering, we

29:35

want to hear from you. You can email

29:38

us at hello at I T

29:40

E pod dot C A. You

29:42

can also call us and just talk. Go for

29:44

as long as you want. Leave a voicemail. The

29:46

number is 416-935-5935. We

29:53

don't need your real name. We

29:55

do need your real numbers, both financial

29:57

and a phone number. So we can get into. with

30:00

you. Thank you so much for listening.

30:02

If you liked this show, if you want

30:04

us to keep making this show, if you

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want more, please share and tell

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rate, review, follow, whatever

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that will help more people see

30:21

this show, listen to this show,

30:23

and hopefully like this show. I'm

30:25

your host and executive producer, Jordan

30:27

Heath Rawlings. This episode was written

30:29

in produced by Alison Brouverman and

30:31

Stephanie Phillips. The sound design was done

30:33

by Ryan Clark. Mary Jubrin is

30:35

our digital editor. Diana Kay is

30:37

our manager of business development. Together,

30:39

we make up the Frequency Podcast

30:41

Network, which is a division of

30:43

Rogers. Thanks again for listening. We

30:46

will talk next week on In

30:48

This Economy. you