Quote:
Originally Posted by Slava
I don’t want to give advice online, because it’s obvious that I don’t know the full situation here. But a couple things in general:
A) you could get retroactive payments from Service Canada because they do this when they pay things like CPP/OAS depending on the exact situation. I’m not completely sure about GIS though.
B) I’d really think about the plan of taking your income to zero for a few reasons. First, it sounds like you’re about to make a bunch of non-taxable or already taxed money, taxable. While that might get you some GIS, you want to make sure that makes sense (assuming you can get the GIS this way).
B1/2) ETA: you might not need to take your income right down to zero in this plan. You get the basic personal amount and things like that, so those RRSP contributions are almost a moot point. You could be best to set those funds aside and stagger the contributions through the next few years. I’m not saying that’s what you should do for sure, but you’d need to do the math and see what comes out the most favourable.
I know some people here are going to get irritated with my saying this for the second time in a few days…but there are professionals who do this kind of thing for a living, and we can handle these kinds of scenarios. You should probably consider some professional advice.
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Thanks for your reply. I strongly value your expertise in all things financial.
I am not about to turn my hard earned TFSA into taxable money. It will be my best income stream when I start drawing from it in three years. My RSP contribution will come out of my wages, as always. I actually won't have to make a massive contribution to achieve the zero income, as I have a good amount of unused RSP contributions that I made two years ago.
I have enough RSP room to collect max GIS for the first four years of my retirement. I only have to offset my CPP, which I already collect, and a very small company pension. I would also pay no income tax for those years. I am prepared to pay the tax on the RSP when I start withdrawing from it. To me, having that GIS money means I don't have to draw from my investments as much for those years.
Maybe "zero income" is the wrong term. What I meant was whatever amount of RSP contribution is necessary to qualify for max GIS. I should also mention that I am still eighteen months away from my retirement, so no rash decisions are being made. Thank you for your concern, Sliver.
I am trying to structure my retirement so that at least half of my income will be tax free, even when I start doing the RIF withdrawals.
I really do need to find out about retroactive GIS payments. It could amount to over twelve grand for my retirement year so I at least want to be prepared for it. GIS is not usually considered in most retirement plans but I think it should enter the conversation. I barely knew about it until a couple of years ago. Thanks to my RSP room, I can collect an extra cheque every month on top of the tax deferral.