“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

Why You Might Want To Withdraw MORE Than The RRIF Minimum

Why You Might Want To Withdraw MORE Than The RRIF Minimum

At some point every retiree with an RRSP is going to need to make a decision about converting their RRSP to a RRIF. The Registered Retirement Income Fund (RRIF) works very similarly to the RRSP with a couple notable exceptions.

One of those exceptions is that there is a minimum RRIF withdrawal. Retirees need to make this minimum withdrawal from their RRIF each year. This minimum withdrawal escalates each year as the retiree gets older. By the time a retiree reaches their mid-90s they are forced to withdrawal 20% of their RRIF each year!

Because the withdrawal is a minimum, and conversion from a RRSP to a RRIF is mandatory, this often leads retirees to believe that keeping money in a RRIF is a good idea. After all, if they’re being forced to take money out, wouldn’t that suggest that keeping money in is a good idea?

For many retirees, taking out only the minimum RRIF withdrawal each year is actually a bad idea. Many retirees would benefit from a different RRIF withdrawal strategy. Many retirees would benefit from taking out more than the minimum each year. They would increase their financial flexibility, they would decrease the tax on their estate, and they could even qualify for certain benefits late in retirement.

RRIF withdrawal strategy is especially important now. The federal government just announced that the minimum RRIF withdrawal for 2020 will be reduced by 25%. This may lead many retirees to “take advantage” of this opportunity when it’s not necessarily in their best interest.

In this post we’ll look at RRIF withdrawal rules, the minimum RRIF withdrawal percentage by age, and we’ll explore two scenarios where we show how a retiree can benefit from RRIF withdrawals that are larger than the minimum.

We’ll also explore how this strategy is even more impactful now, after a large stock market correction.

read more
It’s Time To Plan, Not Panic: How To Prepare For A Recession

It’s Time To Plan, Not Panic: How To Prepare For A Recession

They say the best time to plant a tree was 20-years ago but the second best time is now.

The same goes for financial planning. The best time to build a plan is before a crisis/recession/depression but the second best time is today. A good financial plan will help ensure that you’re prepared for a recession or financial emergency.

Having a financial plan provides an incredible amount of peace of mind. A good financial plan will already have anticipated a scenario like this and will ensure you’re still successful. It will highlight how to prepare for a recession and what changes you need to make to ensure you are successful over the long-term.

There are a few best practices that can help improve the ‘robustness’ of a financial plan. These are practices you can start using right away, even if they weren’t previously part of your plan.

Some of these best practices focus on behavior. They help manage your financial routine during emotional periods like this. Some focus on flexibility. They ensure that you have room in your plan to absorb the unexpected, whether that be changes in income, changes in expenses, or changes in investment returns.

It doesn’t matter if you’re in retirement, starting a family, or just starting to save and invest, there are a number of ways that you can prepare for a recession that will help you feel better about your finances and your long-term plan.

This post will touch on many of these best practices. These are best practices that we’ve covered in previous posts, so we’ll cover the basics here and link to past posts for more detail.

read more
How Do Tax Brackets Work? What Is Your Tax Bracket?

How Do Tax Brackets Work? What Is Your Tax Bracket?

How do tax tax brackets work? How do you figure out your tax bracket? These are important questions, especially when you’re trying to make the most of your money.

Figuring out your tax bracket can be very helpful when making personal finance decisions. It can help you decide which type of account to use, for example the TFSA or the RRSP. It can also help you understand how much you’ll keep after receiving a raise. It can help you understand how much tax you’ll pay on any extra spending in retirement.

Understanding how tax brackets work, and what tax bracket you’re in, will help you make smarter financial decisions.

But tax brackets can be confusing, they can feel like a real mess of numbers. And even when you understand how tax brackets work there is something called your marginal effective tax rate that can add to the complexity. This is when we look at both income tax rates plus government benefit clawback rates. Looking at both income tax rates and government benefit clawback rates at the same time can expand the number of tax brackets to 10-20+

In this post we’re going to show you how tax brackets work with a few visual examples. We’ll break down a few different income levels into their different tax brackets.

We’ll also talk about tax deductions and tax credits and how they affect (or don’t affect) your tax bracket. Lastly, we’ll touch on marginal effective tax rates.

read more

Owen Winkelmolen

Fee-for-service financial planner and founder of PlanEasy.ca

“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

Why You Might Want To Withdraw MORE Than The RRIF Minimum

Why You Might Want To Withdraw MORE Than The RRIF Minimum

At some point every retiree with an RRSP is going to need to make a decision about converting their RRSP to a RRIF. The Registered Retirement Income Fund (RRIF) works very similarly to the RRSP with a couple notable exceptions.

One of those exceptions is that there is a minimum RRIF withdrawal. Retirees need to make this minimum withdrawal from their RRIF each year. This minimum withdrawal escalates each year as the retiree gets older. By the time a retiree reaches their mid-90s they are forced to withdrawal 20% of their RRIF each year!

Because the withdrawal is a minimum, and conversion from a RRSP to a RRIF is mandatory, this often leads retirees to believe that keeping money in a RRIF is a good idea. After all, if they’re being forced to take money out, wouldn’t that suggest that keeping money in is a good idea?

For many retirees, taking out only the minimum RRIF withdrawal each year is actually a bad idea. Many retirees would benefit from a different RRIF withdrawal strategy. Many retirees would benefit from taking out more than the minimum each year. They would increase their financial flexibility, they would decrease the tax on their estate, and they could even qualify for certain benefits late in retirement.

RRIF withdrawal strategy is especially important now. The federal government just announced that the minimum RRIF withdrawal for 2020 will be reduced by 25%. This may lead many retirees to “take advantage” of this opportunity when it’s not necessarily in their best interest.

In this post we’ll look at RRIF withdrawal rules, the minimum RRIF withdrawal percentage by age, and we’ll explore two scenarios where we show how a retiree can benefit from RRIF withdrawals that are larger than the minimum.

We’ll also explore how this strategy is even more impactful now, after a large stock market correction.

read more
It’s Time To Plan, Not Panic: How To Prepare For A Recession

It’s Time To Plan, Not Panic: How To Prepare For A Recession

They say the best time to plant a tree was 20-years ago but the second best time is now.

The same goes for financial planning. The best time to build a plan is before a crisis/recession/depression but the second best time is today. A good financial plan will help ensure that you’re prepared for a recession or financial emergency.

Having a financial plan provides an incredible amount of peace of mind. A good financial plan will already have anticipated a scenario like this and will ensure you’re still successful. It will highlight how to prepare for a recession and what changes you need to make to ensure you are successful over the long-term.

There are a few best practices that can help improve the ‘robustness’ of a financial plan. These are practices you can start using right away, even if they weren’t previously part of your plan.

Some of these best practices focus on behavior. They help manage your financial routine during emotional periods like this. Some focus on flexibility. They ensure that you have room in your plan to absorb the unexpected, whether that be changes in income, changes in expenses, or changes in investment returns.

It doesn’t matter if you’re in retirement, starting a family, or just starting to save and invest, there are a number of ways that you can prepare for a recession that will help you feel better about your finances and your long-term plan.

This post will touch on many of these best practices. These are best practices that we’ve covered in previous posts, so we’ll cover the basics here and link to past posts for more detail.

read more
How Do Tax Brackets Work? What Is Your Tax Bracket?

How Do Tax Brackets Work? What Is Your Tax Bracket?

How do tax tax brackets work? How do you figure out your tax bracket? These are important questions, especially when you’re trying to make the most of your money.

Figuring out your tax bracket can be very helpful when making personal finance decisions. It can help you decide which type of account to use, for example the TFSA or the RRSP. It can also help you understand how much you’ll keep after receiving a raise. It can help you understand how much tax you’ll pay on any extra spending in retirement.

Understanding how tax brackets work, and what tax bracket you’re in, will help you make smarter financial decisions.

But tax brackets can be confusing, they can feel like a real mess of numbers. And even when you understand how tax brackets work there is something called your marginal effective tax rate that can add to the complexity. This is when we look at both income tax rates plus government benefit clawback rates. Looking at both income tax rates and government benefit clawback rates at the same time can expand the number of tax brackets to 10-20+

In this post we’re going to show you how tax brackets work with a few visual examples. We’ll break down a few different income levels into their different tax brackets.

We’ll also talk about tax deductions and tax credits and how they affect (or don’t affect) your tax bracket. Lastly, we’ll touch on marginal effective tax rates.

read more

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

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