OAS Elegibility going up to 67

[Azure]

Originally Posted by Slava

-Second OAS is income tested. The clawback begins at $67,667 and for every $100 in income over that the OAS benefit is reduced by $15. After you earn an income of about $108k (going from memory here) you get zero OAS.

I think that needs to be dropped. Why on earth does someone who makes over $70,000/year need OAS at all? Almost $20,000/year more than the average salary in Canada.

Clawback begins at $35,000....and goes until it reaches the average salary in Canada. Maybe $5,000 more than that, and after that you receive nothing.

From there I would seriously begin phasing it out. This program should be designed to help the 'needy'....as in the POOR. Not those that have no excuse for not having put money away to retire on. The taxpayer shouldn't be on the hook for them.

- There are also stipulations where you can earn partial pensions depending on how long you've been in Canada and you can also receive OAS even if you live abroad.

I would say no OAS if you live abroad, and you must be in Canada at least 'ten' years before you can receive any OAS. Might be harsh, but we don't need immigrants that are 65 to move over and instantly starting sucking off the taxpayer if they've never contributed to Canadian society.

I think OAS should be stopped entirely. I know thats a harsh stance and would be less than appreciated by people older than me and many of my clients. The reality is that the baby-boomers are poised to retire and leave the next generation with huge debts. Its a generation that doesn't want taxes increased, doesn't want services cut and doesn't want to work any longer than is absolutely necessary. (Obviously I'm generalizing here and painting a generation with a broad brush). Its hard for someone my age not to think "so what if you have to work an extra few years? Work until the debts are cleared up and you can retire after that."

I know....its not going to be popular with some, but thats my opinion.

Harsh indeed.

I wouldn't do it instantly, but I would certainly take a hard long-look at it over a 10-20 year period.

What is the level of income where we consider someone to be living poverty? Less than $18,000? Maybe OAS should ONLY be for those people.

[JD]

Originally Posted by chemgear

Most Canadians expect to work past the age of 66 — and the majority of those workers say it will be because they need to, not because they want to, a new survey suggests.

I'm pretty sure most people spend their entire lives working because they need to and not because they want to.

[Azure]

Originally Posted by chemgear

http://business.financialpost.com/20...ast-66-survey/

Most Canadians expect to work past the age of 66 — and the majority of those workers say it will be because they need to, not because they want to, a new survey suggests.

As the federal government tries to sell Canadians on changes to Old Age Security, a survey by Ipsos Reid for Sun Life Financial has found that only 30% of Canadians expect to be fully retired at 66.

Good. There is no reason for most people to retire that early. Why shouldn't they work longer?

[Azure]

I also like the fact that we're having this discussion, and that the government is making a big deal about it, even if the morons in the NDP party will bitch about it.

Might not like everything the conservatives have done or will do, but they are absolutely right in bringing this program into the forefront, exposing how stupid it has been setup, and stripping it down.

[Slava]

Originally Posted by Azure

I also like the fact that we're having this discussion, and that the government is making a big deal about it, even if the morons in the NDP party will bitch about it.

Might not like everything the conservatives have done or will do, but they are absolutely right in bringing this program into the forefront, exposing how stupid it has been setup, and stripping it down.

The Conservatives aren't going to make a huge move here either. They don't want to bite the hand that feeds them either, so most likely I would imagine it will be a raise to age 67 and that will begin probably in 2020. (I don't know that to be the case, its just a guess)

[PeteLFan]

No reason to retire at 66? Lol

[Azure]

I agree. It probably won't be anything serious, but I'm optimistic that they'll lower the clawback number as well.

[Red Ice Player]

Originally Posted by Slava

Ya, I do agree that for low income seniors there should be a program; there is also the Guaranteed Income Supplement (GIS) for low income seniors. I suppose if they dropped the clawback to start at about $30k and it was totally clawed back at about $65k I could see that working.

The TFSA is a great account and I do think that it will be a large factor for financial planning going forward. Even this year the limit is at $40k for a couple, plus growth. Thats a significant sum of money for most people and soon enough it will be enough to build a reasonable portfolio with. A few years ago there were quite a few people who used the account for either really low risk investments (because it is called a savings account and many didn't realize it could be invested), or high risk or speculative investments (because it was only five grand). Now I see more planning and thought given to these investments though and as the amounts rise I think you will see more of that.

Overall there are a few major benefits to the TFSA. You don't pay taxes on gains, or on withdrawals. That is a huge benefit over an RRSP; while the RRSP gives you a tax break when you invest, it really defers that tax until you withdraw it. The other major benefit is that you can withdraw funds from the TFSA and not lose the room. So if you take $5000 out for something you can reinvest that again the next calendar year. In an RRSP (unless its a specific program) you don't have that flexibility and once you withdraw that contribution room is gone.

Feel free to ask any questions you have or send me a PM if you prefer.

You have explained it very well. Frankly, I ignored the TFSA the first couple of years it was around. The name is misleading. I am building mine into what will become my main investment account. The fact that I will never have to declare a capital gain (and therefore not have to carefully record all my activity) in this account makes me get excited about investing again. You can keep on contributing to it as long as you live, as there is no cut off age like with the RRSP. I have read a snivelling cynical negative take on the TFSA (from who else, the Toronto Star) saying that its a gold mine for the investment community and a further erosion of the tax base. I say that its a reward for people who are willing to sacrifice some of their disposable after tax income early in their careers, and I believe it will make TFSA investors less of a burden on the taxpayer when they retire.

[SebC]

Originally Posted by Slava

The Conservatives aren't going to make a huge move here either. They don't want to bite the hand that feeds them either, so most likely I would imagine it will be a raise to age 67 and that will begin probably in 2020. (I don't know that to be the case, its just a guess)

Granfathered for people under 57, so you're dead on. I hate seniors.

[Slava]

Originally Posted by Red Ice Player

You have explained it very well. Frankly, I ignored the TFSA the first couple of years it was around. The name is misleading. I am building mine into what will become my main investment account. The fact that I will never have to declare a capital gain (and therefore not have to carefully record all my activity) in this account makes me get excited about investing again. You can keep on contributing to it as long as you live, as there is no cut off age like with the RRSP. I have read a snivelling cynical negative take on the TFSA (from who else, the Toronto Star) saying that its a gold mine for the investment community and a further erosion of the tax base. I say that its a reward for people who are willing to sacrifice some of their disposable after tax income early in their careers, and I believe it will make TFSA investors less of a burden on the taxpayer when they retire.

I think they should've called it the "Tax Free Investment Account", although the banks are likely thrilled with the current name. Its too bad, but hopefully more people start to learn about it anyway.

I actually do think that its a limited window for the TFSA though in terms of its tax treatment. I just can't see future governments letting you have a few hundred thousand bucks to draw on tax free as the need (see my thoughts on debt being left for future generations) and allure is probably too large to ignore. With no growth at all for a married couple at 35 today thats $250k that they would pay zero taxes on, both on the way up and when its drawn down. Just with prudent investing, that could easily be doubled and then some. It won't be enough to retire on alone at that point, but at todays tax rates thats roughly $200k in taxes the government has to ignore....from one household.

[Cowboy89]

Originally Posted by Slava

I think they should've called it the "Tax Free Investment Account", although the banks are likely thrilled with the current name. Its too bad, but hopefully more people start to learn about it anyway.

I know far too many people who think they're being prudent by stuffing $5k a year to get slaughtered by inflation in a 'High' interest TFSA savings account. Windfall for the banks indeed.

[Fire]

Originally Posted by SebC

Drop the eligibility income. There's no need to give more money to people making $70K a year.

I tend to agree with you but this also punishes people who were responsible in their retirement in order to subsidized people who didn't save.

Ideally I would scrap the OAS all together. Not right away but slowly over 25 years.

[Cowperson]

Originally Posted by Azure

I think that needs to be dropped. Why on earth does someone who makes over $70,000/year need OAS at all? Almost $20,000/year more than the average salary in Canada.

Clawback begins at $35,000....and goes until it reaches the average salary in Canada. Maybe $5,000 more than that, and after that you receive nothing.

From there I would seriously begin phasing it out. This program should be designed to help the 'needy'....as in the POOR. Not those that have no excuse for not having put money away to retire on. The taxpayer shouldn't be on the hook for them.

Someone who makes hundreds of thousands a year would still think they could use OAS. A dollar is a dollar. They even try to arrange their income so it legally appears they qualify in order to capture it.

Similarly, everyone applies for CPP, even if they have corporate pensions of hundreds of thousands a year. They feel they paid into it and are entitled to the benefit.

Secondly, a lot of those people with greater than $70,000 in income in retirement probably worked pretty hard to position themselves to get there. My experience is that a great many millionaires are fairly common folk who simply accumulated wealth through time . . . . and a big chunk of them believe those who didn't have the same attitude were simply selfish and imprudent and don't deserve a lot of sympathy.

If you're poor after a lifetime of effort, you've probably earned it.

So, I don't think you should be arguing this on the basis of the wealthier, smarter people not needing the money. You won't get a lot of sympathy necessarily.

I'd argue the point on a humanitarian basis - we don't want little old ladies in our Society eating cat food to survive - and the fact its probably cheaper to bring these people up to a certain, sustainable income level than it is to pay for other social services that arise out of poverty.

My two cents.

On TFSA's . . . . greatest thing since sliced bread. Just heard this morning about someone out east with $800,000 in their TFSA, putting warrants into the TFSA and then exercising them. Apparently that loophole has been closed.

I think TFSA's in their present form will be around a long, long time. It encourages people to save and to prepare themselves for retirement as opposed to being short-sighted, indulgent idiots and needing government to help them later on.

Not sure how that will all work out because I think there will always be a certain, fairly high, percentage of the population that will never save a dime in their lifetimes. Like my brother.

Cowperson

[macker]

Originally Posted by Slava

I think they should've called it the "Tax Free Investment Account", although the banks are likely thrilled with the current name. Its too bad, but hopefully more people start to learn about it anyway.

I actually do think that its a limited window for the TFSA though in terms of its tax treatment. I just can't see future governments letting you have a few hundred thousand bucks to draw on tax free as the need (see my thoughts on debt being left for future generations) and allure is probably too large to ignore. With no growth at all for a married couple at 35 today thats $250k that they would pay zero taxes on, both on the way up and when its drawn down. Just with prudent investing, that could easily be doubled and then some. It won't be enough to retire on alone at that point, but at todays tax rates thats roughly $200k in taxes the government has to ignore....from one household.

Never been the biggest bank backer myself but you can't dismiss all banks for savings or investing as many have pointed out.
http://www.newswire.ca/en/story/8881...estment-awards

http://www.rbc.com/aboutus/awards.html

Lets not get carried away with the easy bank bashing....

[Azure]

Originally Posted by Cowperson

Someone who makes hundreds of thousands a year would still think they could use OAS. A dollar is a dollar. They even try to arrange their income so it legally appears they qualify in order to capture it.

Which is why I would make the changes over a long-period of time, to allow people to arrange their income so they don't need to depend on OAS down the road.

Similarly, everyone applies for CPP, even if they have corporate pensions of hundreds of thousands a year. They feel they paid into it and are entitled to the benefit.

CPP is different though. People pay in for 30 some years before they can pull out. The program just needs to be sustainable over a long-period of time and there shouldn't be a problem at all. OAS isn't funded at all outside of tax revenue for THAT year. So as the baby boomers retire, suddenly the younger generation, as in me(and not you ..) will have to fund the program.

I just think OAS should be a welfare program designed to help those that never made enough to put away enough to be able to retire properly.

[Slava]

Originally Posted by macker

Never been the biggest bank backer myself but you can't dismiss all banks for savings or investing as many have pointed out.
http://www.newswire.ca/en/story/8881...estment-awards

http://www.rbc.com/aboutus/awards.html

Lets not get carried away with the easy bank bashing....

What does that have to do with the TFSAs and how they're invested?

Besides I figured that you would be more inclined to love BMO with their newish line-up of ETFs....

[Slava]

Originally Posted by Azure

Which is why I would make the changes over a long-period of time, to allow people to arrange their income so they don't need to depend on OAS down the road.



CPP is different though. People pay in for 30 some years before they can pull out. The program just needs to be sustainable over a long-period of time and there shouldn't be a problem at all. OAS isn't funded at all outside of tax revenue for THAT year. So as the baby boomers retire, suddenly the younger generation, as in me(and not you ..) will have to fund the program.

I just think OAS should be a welfare program designed to help those that never made enough to put away enough to be able to retire properly.

And to add to this, maybe more people will just never retire. Its not the end of the world; retirement is a newer concept anyway. Maybe you can't afford to retire. Maybe you don't really want to retire (I know, call me crazy, but that happens as well!)

[macker]

Originally Posted by Slava

What does that have to do with the TFSAs and how they're invested?

Besides I figured that you would be more inclined to love BMO with their newish line-up of ETFs....

Why not just stick with RBC......http://funds.rbcgam.com/etfs/index.h...4270ADE6ACEC82

RBC has lower fees than most other companies out there including savings accounts, investments accounts, TFSA's, RRSPs, etc.etc.

And yes high fees continue to be an issue for investors in Canada....
http://faircanada.ca/top-news/mutual...ven-high-mers/
So basically, RBC : a bank, offers relatively good value on a fee basis and performance basis for TFSA's or savings accounts or whatever you want to call them and have a well rounded offering to build a portfolio with. Proud RBC shareholder.....

[SebC]

Originally Posted by Fire

I tend to agree with you but this also punishes people who were responsible in their retirement in order to subsidized people who didn't save.

Ideally I would scrap the OAS all together. Not right away but slowly over 25 years.

Just so we're clear, by drop I mean "lower", not "abandon".

And no, I don't want to pay 25 years of taxes to support a program I'll never benefit from. I don't know how anyone can see that as fair. Especially when that program gives money to the relatively well off - some of them with a higher income than what I have (and they're not even working)!

[Slava]

Originally Posted by macker

Why not just stick with RBC......http://funds.rbcgam.com/etfs/index.h...4270ADE6ACEC82

RBC has lower fees than most other companies out there including savings accounts, investments accounts, TFSA's, RRSPs, etc.etc.

And yes high fees continue to be an issue for investors in Canada....
http://faircanada.ca/top-news/mutual...ven-high-mers/
So basically, RBC : a bank, offers relatively good value on a fee basis and performance basis for TFSA's or savings accounts or whatever you want to call them and have a well rounded offering to build a portfolio with. Proud RBC shareholder.....

Now I get it.