Vancouver Island Pickleball Title Partner, Owen Williams shares what he wishes all early retirees knew.
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The number one thing I wish all early retirees knew is that you don’t have to wait until 65 or 71 to start withdrawing money from your RRSP.
If you want to maximize the amount you can spend in retirement while simultaneously paying the least amount of tax you have to, an RRSP meltdown strategy should be explored.
An RRSP meltdown is a term for withdrawing money from your RRSP in advance of age 71. At age 71, you are required to convert your RRSP to a RRIF and withdraw an annual minimum amount.
The reason an RRSP meltdown is an effective strategy is because it evens out how much taxable income you report each year. Lumpy, fluctuating annual income is a recipe for paying too much tax, and potentially triggering Old Age Security clawbacks, which reduces the monthly benefit you receive from the government.
Additionally, an RRSP meltdown can lower the amount of investment risk you need to take. Every month you delay the start date of your CPP and OAS payments, the amount you are entitled to receive goes up, guaranteed.
Let me know if you want help exploring how much an RRSP meltdown strategy could save you.
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