You can have too much money in your RRSP
A few weeks ago, we published a lengthy article on why many Canadians should probably steer clear of RRSPS.
If you've got a stack of high-interest credit card or auto debt, for instance, you're going to be much better off paying it down and deferring potential RRSP contributions until you work those loans off.
Even consumer loans at lower rates of interest can be troublesome and may be better eliminated before boosting your RRSP pool.
On the other hand, says Morningstar columnist Gail Bebee, if you’ve been contributing to RRSPs for a while, it may be time to slowdown or stop altogether.
So, how big is big enough? It all depends on your other sources of retirement income, she says, offering the following example.
For a retired person with an annual pension income of $35,000, adding the maximum OAS ($6,291) and CPP ($11,520) amounts would bring your income to $52,811, leaving a net income room of $14,857 before you reach the OAS clawback threshold where benefits are trimmed.
But, to produce an income of $14,857, you’d only need RRIF assets in the $200,000 at age 71 – which is not an astronomical amount.
If you have a workplace pension plan or other sources of taxable income, directing some or all of your retirement savings to non-RRSP investments will offer more tax-planning options, Beebe maintains.
Is there a limit to how much you see yourself salting away in RRSPs? Or do you simply save as much as you can, where you can?
By Gordon Powers, MSN Money
Posted by: Confused | Feb 24, 2022 11:50:23 AM
I get so many mixed messages by many various sources. The only pension plan we have is what we put in as a couple. Retirement will be at age 57 in 14 years where we will have approx. $1 million in RRSP's and $200 000 in TFSA's. We will also get max OAS and CPP for each of us. Yet, my RBC Financial Planner states we will be short based on our desire to have $50 000 a year income combined. Our home is now worth $400K and paid for.
Am I missing the boat here? Should I be investing outside my RRSP's because our investments are mostly in Mutual Funds except for the TFSA? Is my RBC FP off her rocker?
Posted by: Jimmy | Feb 25, 2022 10:05:00 AM
She has a bias towards savings no matter what.
Go to fee-only person for a check up like this fellow in Edmonton ... http://rgafinancial.com/faqs.php. If not your area he can help you find a similar service elsewhere.