Category Archives: Retirement Planning

Odette Morin

OAS restored to age 65

Trudeau oas


Justin Trudeau announced yesterday that next week’s federal budget will restore eligibility for Old Age Security to age 65 from age 67.

“We are keeping the old retirement age at 65,” Mr. Trudeau told the room of journalists and businesspeople. “How we care for our most vulnerable in society is really important.”

He said his predecessor, Stephen Harper, was wrong to move the Old Age Security eligibility to 67 from 65. Mr. Harper raised the age in the 2012 budget, making it effective for 2023.

“We think that was a mistake,” Mr. Trudeau said.

We are delighted by this news for all our younger clients born after 1958. The benefit is currently $570 per month indexed quarterly.

We will have a summary of the 2016 budget highlights on Tuesday. Stay tuned!


Frank Mueller

Have You Paid Yourself Yet?


Bills. We all have them. Mortgage or rent. Cell phone. Internet. Cable. Car loan. The list goes on and on. Bills. They have to be paid, or we lose out on something important to us. Bills. Paying them provides us with the necessities of day-to-day life. Bills. They are seemingly always painful. They are inescapable.

Something else that’s inescapable – and heading toward you faster than you think – is retirement. To many of us, the concept of retirement is somewhat obscure, fuzzy, nebulous; sure, we have a basic idea of what retirement is: the time in our life where we no longer work, and can enjoy our golden years with a nice nest egg that pays us more than enough to cover our base needs, with a little extra so we can enjoy ourselves. But try to be specific. When do YOU plan to retire?

Now, a potentially obvious question you may have is, “How can I take this obscure concept of retirement and turn it into a specific plan”? As a client with us at YOU FIRST, creating this plan is a large part of what we do in your service. We work with you to create a plan that is manageable, is not intimidating, that allows for changes to your life, and that offers room for some rewards to yourself. It is a well-structured road-map, guiding you from today to your destination of retirement and beyond, while avoiding many of the pitfalls that you’ll happen upon along the way.

This brings us back to the beginning of this discussion. One very important “bill” that too few of us keep in mind when balancing our own bankbook is paying ourselves, making sure to follow our road-map and contribute to our RRSP. Consistently putting away money will ensure your nest egg continues to grow. Sure, it’s hard to make that RRSP contribution when you could use that money to do things you want to do today. But try thinking about it like this: every contribution you make into your RRSP is paying yourself at a later date.

It’s no more simple than that. Short-term pain for long-term gain. Of course, there are benefits to contributing to your RRSP: tax relief (and maybe a tax refund), a tax-sheltered haven to grow your money, and ultimately, the satisfaction of knowing you are working for your own benefit instead of just paying seemingly everyone else. So, as the 2015 RRSP Season ramps up toward the February 29th deadline, you may want to ask “Have you paid yourself yet”?

Anthony Sabti

RRSP vs. Mortgage – Where Should I Put My Money?


Clients often ask the following question: “Should I use my excess funds to pay down my mortgage, or to contribute to my RRSP?” It’s a great question, and as with most issues in financial planning, there is no definite answer.

Paying down the mortgage is the “risk-free” option. If $1,000 is applied towards the mortgage, there is a guaranteed savings of the mortgage interest on that amount.

Alternatively, if $1,000 is added to a retirement portfolio, there is no “guaranteed” return. Historically, the Canadian (TSX) and U.S. markets (S&P, Dow Jones) have returned around 8% in the long-run. We project about a 6-8% rate of return for our client’s long-term growth-oriented portfolios.

Mortgage rates are very low these days, somewhere around the 2.5% mark for a five-year fixed rate. This makes the “break-even” point for an investment portfolio to beat mortgage savings fairly low. Without talking about interest compounding or taxes, if the investments return more than 2.5%, then they beat out any mortgage savings strategy.

Our favourite strategy is a hybrid one. Invest long-term money in an RRSP and use the ensuing tax savings to pay down the mortgage. When families can maximize RRSP contributions, they can create significant tax savings which can supplement retirement income plans, as well as reduce mortgage debt. The tax savings created by an RRSP contribution can free up “new money” to be used to pay down mortgage debt. This quickly increases family net worth.

As we say, every situation is unique and depends on your mortgage interest rate and the anticipated return on your investment. Please call or e-mail us and we will be happy to work through the numbers to give you the best advice for your circumstances. We’re here to help you!

Odette Morin

NEW lower RRIF minimum payment rules effective now: consider your options


We are writing to advise all annuitants of Registered Retirement Income Fund (RRIF) held with us of changes to the required minimum annual withdrawal amounts as a result of regulations introduced in the Federal Budget released April 21, 2015.

Specifically, the budget introduced a reduction to the prescribed required minimum annual withdrawal factors for RRIF annuitants 71 to 94 years of age. Starting in 2016, this reduction will result in decreasing the amount that RRIF annuitants will be required to withdraw as a minimum amount during those age years.

This applies to RRIF accountholders who are setup to receive the minimum payment only. If you are setup to receive a fixed amount (ex. $500 a month), you will not be affected.

The table below provides a comparison of the new and old RRIF factors.


All RRIFs 2015+ Post-1992 RRIFs
prior to 2015
71 0.0528 0.0738
72 0.0540 0.0748
73 0.0553 0.0759
74 0.0567 0.0771
75 0.0582 0.0785
76 0.0598 0.0799
77 0.0617 0.0815
78 0.0636 0.0833
79 0.0658 0.0853
80 0.0682 0.0875
81 0.0708 0.0899
82 0.0738 0.0927
83 0.0771 0.0958
84 0.0808 0.0993
85 0.0851 0.1033
86 0.0899 0.1079
87 0.0955 0.1133
88 0.1021 0.1196
89 0.1099 0.1271
90 0.1192 0.1362
91 0.1306 0.1473
92 0.1449 0.1612
93 0.1634 0.1792
94 0.1879 0.2000
95+ 0.2000 0.2000

Generally speaking there is about a 2% decrease in required minimum withdrawals. For example, if you are 75 years old and you have a RRIF with a $100,000 balance, the old minimum amount $7,850 and the new minimum

is $5,820. In this example, you have $2,030 less in taxable income.

Since this change was introduced well after the start of the year but is effective for 2015, you have a few options for 2015:

  1. Minimum Amount – You can choose to take this year’s minimum payment based on the old calculations, in which case you do not need to do anything further (recommended action).
  2. Re-contribute – If you have already, or by the end of the year will have received the required minimum annual withdrawal amount based upon the old factors, you have the option of re-contributing the excess amount to your RRIF. The deadline to make a re-contribution is March 1st, 2016. You will be issued a T4 for the amount withdrawn and an offsetting contribution slip for the re-contribution for your 2015 tax filing (we do not recommended this action, enjoy the extra money for 2015!)
  3. Adjust Payments – You can choose to adjust any minimum payment(s) not yet paid to reflect the new lower calculation. In this case we will require formal updated instructions from you.

No action is required on your part unless your payment(s) are based upon the minimum required withdrawal and you wish to take advantage of the lower required minimum withdrawal for 2015, or wish to re-contribute the excess withdrawals for 2015.

Most RRIF accountholders who are setup to receive the minimum will likely welcome the decrease in payments.

Odette Morin

“But Odette, I will not live to age 90!”

Fauji Singh

When we prepare retirement plans, we run numbers to make sure that your money will last until at least age 90. Invariably, I get the “but Odette, I will not live to age 90”.

If you can’t imagine living to age 90, think again. Meet Fauja Singh, the 104 year old marathoner. He took up running at the age of 89 and up until last year, has ran a marathon every year.

There are plenty of these examples. The number of centenarians (people aged 100 and over) in Canada is rising. Statistic Canada says that group grew 25.7% between 2006 and 2011. It’s also been the fastest-growing segment for nearly 40 years.

Many of our clients in their late 80s and early 90s also live a very full and active life requiring just as much money as in their 60s and 70s.

In a financial planning perspective, we have to plan for the worst case scenario. Living beyond age 90 and running out of money is not something we want to experience. Depending on our children or the state is even worse.

When calculating sustainable drawdown rates for retirees, we need to plan for the retirement funds to last for life, whenever that age is. Too much money is never a problem, I often say, or “Too much is just enough” as my 92 year old mother says.

So, those numbers I calculate for you are not inflated. They are more realistic than you may think. Who knows, you may be the next Fauja Singh we see happily running into the 100s!

You can read more about Mr. Fauja Singh here.


Odette Morin

The Sweet Rewards of a Retirement Well Planned

Classic car

After decades of working every single day, the long-awaited arrival of retirement can understandably mean a chance to relax and enjoy the finer things in life.

It’s time to take that cruise you had promised yourself, enjoy more regular trips to the theatre, perhaps even buy a new classic car!

This is what clients of ours did recently and I could not be happier for them. These long-term clients have planned properly, saved enough for a very comfortable retirement and followed our advice along the way.

Too many pensioners spend far too much money during the early few years of retirement and end up facing a ‘life of frugality’ in their later years.

Buying a classic car or taking that month long cruise is not for everyone but when you have planned properly, started the process early and saved diligently, it sure is comforting to be able to afford a worry free retirement life and to occasionally splurge a little as well.