Topic: The money thread

[quadzilla]

I will be able to income split with my wife who doesn't have a pension. It's all in the planning.

Can you only income split with pension money or can still working people do it?

[Seafoam]

I will be able to income split with my wife who doesn't have a pension. It's all in the planning.

Can you only income split with pension money or can still working people do it?

From what I have been told it is pension income. The federal government was promising to income split in other ways but backed out in the last budget.

[johngenx]

can still working people do it?

No.

[blotter]

The plan now is to use our TFSA's and make annual prepayments to reduce amortization by 5 years.

check your FI to see how much you can do. (i'm sure you've done this already)
we allow 20% per year adding in principal without penalties.
the 20% is calculated on the original MTG amount.

[Hannibalsmith]

The plan now is to use our TFSA's and make annual prepayments to reduce amortization by 5 years.

TSFAs are a great way to build up an asset base that will be non-taxable upon withdrawal. Growth in TFSAs is also not taxed!

This source of income could be a good  bridge until you are forced to draw on taxable income (i.e. RSPs, pension, etc.). Obviously everyone's situation is different but you may want to consider that into the equation before using these funds to pay down the mortgage.

[Snowman]

The plan now is to use our TFSA's and make annual prepayments to reduce amortization by 5 years.

TSFAs are a great way to build up an asset base that will be non-taxable upon withdrawal. Growth in TFSAs is also not taxed!

This source of income could be a good  bridge until you are forced to draw on taxable income (i.e. RSPs, pension, etc.). Obviously everyone's situation is different but you may want to consider that into the equation before using these funds to pay down the mortgage.

Yeah, early retirement will be 100% funded from non registered funds and dividends from Snowman Inc.

[Snowman]

This is a great site for running scenarios and calculations:

https://www.retirementadvisor.ca/retadv/apps/tools/tools.jsp

[Hannibalsmith]

The plan now is to use our TFSA's and make annual prepayments to reduce amortization by 5 years.

TSFAs are a great way to build up an asset base that will be non-taxable upon withdrawal. Growth in TFSAs is also not taxed!

This source of income could be a good  bridge until you are forced to draw on taxable income (i.e. RSPs, pension, etc.). Obviously everyone's situation is different but you may want to consider that into the equation before using these funds to pay down the mortgage.

Yeah, early retirement will be 100% funded from non registered funds and dividends from Snowman Inc.

Ah, yes the corp, another great source of tax deferral. Good plan.

[ArticSteve]

Till the NDP get in.      

[Hannibalsmith]

Till the NDP get in.      

  ...don't even joke about that

[Northernridge]

Till the NDP get in.      

  ...don't even joke about that

Because you could find yourself in Manitoba.

[johngenx]

Current federal NDP policy initiatives (which I highly doubt naysayers have even read) run about even with the Progressive Conservative Party of Alberta from the Lougheed era.

[Northernridge]

Reading the last two pages of this thread...

Mortgage taking longer to pay off than planned – One of the reasons I'm thankful to have my own business is that I can (at least attempt) to ramp up revenue to respond to financial surprises. If I was an independent consultant I'd hit a capacity/income ceiling...but jettison the risk/baggage of LOTS of overhead. I think about this issue a lot.

TFSA – Great for the reasons everyone says but with low limits they amount to play money...unless you swing for the bleachers with investments.

Non-pension retirement – While I maximize my RSPs, dividend income from my investco will be the primary funder of my retirement (at least that's the plan)

However, my real strategy is not to retire and rather evolve the business or create others that match my future abilities and interests. Long-term financial stress evaporates with no desire to retire.

[wing]

The TFSA limits are low now but as years progress it will be fruitfull.  I already have $100k in ours between the two of us.  That's more than play money for me.

[Ex-airbalancer]

The TFSA limits are low now but as years progress it will be fruitfull.  I already have $100k in ours between the two of us.  That's more than play money for me.

You have made $50,000 in 5 years ! Nice

[Northernridge]

The TFSA limits are low now but as years progress it will be fruitfull.  I already have $100k in ours between the two of us.  That's more than play money for me.

You've done well, way above the average. Even with 5 times that amount though the average couple still can't retire on it. Maybe it will be different for our kids. Speaking of which, if they start young I bet they could bypass RSPs completely...makes me wonder if federal governments 30-40 years from now will be content to forgo tax revenue from fully-funded retirement schemes in TFSAs...

[Seafoam]

 The conservatives have  promised to increase the TFSA limit to $10,000 if they balance the budget next  year. Who knows if they will keep their promise.

[HeliDriver]

The TFSA limits are low now but as years progress it will be fruitfull.  I already have $100k in ours between the two of us.  That's more than play money for me.

You have made $50,000 in 5 years ! Nice

Isn't the total contribution limit $31,000 now? So $62,000 for a couple, meaning growth of $38k, not $50k.

Just nitpicking. Still some nice growth.

[Northernridge]

The conservatives have  promised to increase the TFSA limit to $10,000 if they balance the budget next  year. Who knows if they will keep their promise.

It's not the 1 and 2 year scenarios I'm worried about (or even this party vs. that), it's the 5, 10 and 20 year and future demographics. Think about the day when the first investors arrive at retirement with full TFSAs and empty RSPs – that's zero tax revenue. I'd like to believe we'll get there but we do live in a pretty socialist country.

[evil_twin]

The conservatives have  promised to increase the TFSA limit to $10,000 if they balance the budget next  year. Who knows if they will keep their promise.

It's not the 1 and 2 year scenarios I'm worried about (or even this party vs. that), it's the 5, 10 and 20 year and future demographics. Think about the day when the first investors arrive at retirement with full TFSAs and empty RSPs – that's zero tax revenue. I'd like to believe we'll get there but we do live in a pretty socialist country.

But is the government really making much tax revenue on RSPs??  They still grow tax free and you're only paying income tax on withdrawal.

Sure that taxable amount will grow between deposit and withdrawal time, but (in general), at no greater rate than the government could grow the value of the initial tax amount.   Assuming they can make as wise an investment decision as you can.

There's also the consideration that most people would pay taxes at a higher marginal tax rate during their working years than in retirement.  So theoretically the gov't could be actually losing money in the long term on the RSP.

Or am I missing something obvious here?