Comments on: Advantages of a RRSP

By: Kathryn

Kathryn — Tue, 11 Apr 2006 15:28:35 +0000

Is there a median whereby a RRSP is not advantageous? Consider 2 healthy RRSP’s, say $350,000 each. The husband passes away and it rolls over to the wife…her total RRSP $700,000. OK, it’s sheltered from tax, at least until she dies and then the government will get approximately $350,000…..since, let’s say, $500,000 was put in with after-tax income…..is it really such an advantage?

By: Canadian Capitalist

Canadian Capitalist — Wed, 21 Dec 2005 22:11:22 +0000

Dave: You are correct. I think of my RRSP as my personal pension account. It will hopefully supplement my OAS and CPP.

By: Dave W

Dave W — Tue, 20 Dec 2005 15:09:43 +0000

Very good discussion.

There are always reasons to distrust government plans for retirement savings, but self directed RSPs are making it possible for many Canadians (not enough though) to think before they jump. It will be nice to have a supplement to CCP and OAP, a state of independance, taxed yes, but nevertheless something less controlled.

By: Canadian Capitalist

Canadian Capitalist — Thu, 08 Dec 2005 22:06:46 +0000

Mike: I like a good discussion

It is true that if I die tomorrow, my RRSP will be melted down and my estate would have to pay tax on it. But, the same thing is also true of all stocks and bonds I hold outside my RRSP. The taxman always gets a piece!

Think of the RRSP as something that provides income during your retirement. To take care of my family, if I die suddenly, I have life insurance.

There is one small segment for whom RRSP may not make sense. It is those who have a very low income and won’t get much of a break for contributing to a RRSP. For everyone else and especially those in the top tax brackets, RRSPs are a excellent choice.

By: Ray

Ray — Thu, 08 Dec 2005 21:59:36 +0000

I would like to see Mike W.’s other evidence because I also agree that only-RRSP investments don’t necessarily make the most sense. I think there are scenarios where you can get the tax-deferred nature of RRSP an RRSP portfolio by making strategic contributions to an RRSP in order to offset any tax generated by the non-RRSP portfolio.

By: Mike W.

Mike W. — Thu, 08 Dec 2005 20:30:46 +0000

I have to get more evidence for my anti-RRSP argument (you’re winning right now) but another disadvantage is that in the case of accidental death or if you die, the cra takes something like 25% (or more) away from the estate.

Like I said, I need to get more evidence for my argument but I still believe in it.

By: ncnblog

ncnblog — Thu, 08 Dec 2005 18:51:57 +0000

While getting out of debt, I continued my 403b contributions, at just 100 dollars a month, because of a $17.50 match from my company. That may not seem like much, but it is a guaranteed 17.50 percent match…17.50 was the max for a month, so I continued to contribute just the right amount to get the max…
great blog…
ncnblog.com

By: Canadian Capitalist

Canadian Capitalist — Thu, 08 Dec 2005 15:35:10 +0000

Pablo: PH&N has listed the assumption they are making for the three asset mix scenarios in the Appendix.

By: petey pablo

petey pablo — Thu, 08 Dec 2005 12:22:22 +0000

hi where are they getting the numbers for to come up with the graphs. Don’t get me wrong I believe in RRSPs, but i’m just curious where they’re getting the data from. thanks