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January 28, 2022

Some older investors come out ahead

By Gordon Powers, Sympatico / MSN Finance

While yesterday’s budget didn’t target retirees specifically, older investors will certain benefit from the adjusted tax brackets, a reduced bite on RRIF payments and the increase in the senior age credit -- a small consolation for those who saw their savings vaporize in 2008. 

The biggest change is the 7.5% increase in the lowest income tax brackets, which will jump to $40,726 and $81,452 respectively, allowing retirees to withdraw a bit more income without sliding into the next bracket.

Upping the senior age credit exemption to $6,408 will mean $150 in additional tax savings for those who qualify.
That means, coupled with the tax-bracket changes, someone making about $40,000 in retirement will see an extra $316 in their pocket. However, since the credit is tied to income, anyone making more than $80,000 won’t be able to use it.

The tax bracket changes will also allow some older investors to get money out of their RRSPs a bit faster and at a slightly lower tax rate. And, if they don't need the money to live on, pulling out an extra $5,000 a year and rolling it into the new TFSA just got that much more attractive.

Also important is the fact that the government is going through with its one-time 25% reduction in mandatory RRIF withdrawals as promised. If you’ve already withdrawn more than the revamped minimum, you can head off to the bank and put it back in.



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...