TFSA vs RRSP: Cutting Through the Confusion скачать в хорошем качестве

TFSA vs RRSP: Cutting Through the Confusion

Unconventional Wisdom & Advice https://edrempel.com/ 905-846-9998 Choosing between a Tax-Free Savings Account (or TFSA) and a Registered Retirement Savings Plan (or RRSP) can be confusing. Weighing the pros and cons of each is an important part of creating a financial plan that is right for you. Your personal Financial Plan should include the income per year you will need - after you retire -to have the retirement lifestyle you want. Your Plan should also calculate the optimal amount you will need to contribute to TFSA or RRSP per year to achieve this. With a financial plan, you will know the difference between your current tax bracket and the tax bracket you will experience after you retire. It’s easy to assume your income will be less, so your tax bracket will be less, but that is not necessarily accurate.  Many government income programs allow clawback provisions that put many seniors, effectively, in shockingly high tax brackets! Clawbacks are just like a tax and they can be an unexpected cost, so it’s important to know how the three most common clawbacks break down: 1.      Low income (less than $25,000) – 50% clawback on GIS 2.      Middle income ($40,000-$90,000) – 15% clawback on the age credit 3.      High income ($80,000-$130,000) – 15% clawback on OAS You can own the same investments in your TFSA as in your RRSP. The difference is the RRSP contributions and withdrawals have tax consequences and the TFSA contributions don’t. So, the choice of TFSA vs RRSP hinges on what your marginal tax bracket is today compared to when you withdraw funds after you retire. A Rule of Thumb… RRSP is better, if you will be in a lower marginal tax bracket during retirement.    • TFSA vs RRSP: Cutting Through the Confusion   TFSA is better if you will be in a higher marginal tax bracket during retirement. You can choose either an RRSP or TFSA if you will be in the same marginal tax bracket during retirement. There are also two other details to consider: How will I use my tax refund? If you will spend your tax refunds, then TFSAs will give you a more comfortable retirement. Is the withdrawal flexibility from my TFSA a pro or a con? Flexibility is good, but if you are tempted to withdraw before retirement, RRSP might be a better choice. With a mix of fully-taxed RRSP & pensions, tax-efficient non-registered investments, and non-taxed TFSA sources of income, we can plan effectively for you to receive the cash for the retirement you want, while remaining in lower tax brackets. A sound financial plan that cuts through the confusion of TFSAs, RRSPs, tax brackets, clawbacks and inflation sets you up for a comfortable and worry-free retirement. It will have the optimal strategies that are right for you. For more in depth information, read the full article in the Must Read section.    • TFSA vs RRSP: Cutting Through the Confusion