RRSP Meltdown

The old assumption about RRSPs was that your income would be significantly lower during retirement than it was during your working years. We’re beginning to see evidence that, for some investors, this assumption is just not true. What’s more, income drawn from an RRSP (or RRIF) can raise a retiree’s income to the point where he or she will have government benefits “clawed back” or will lose access to income-tested programs for social housing, chronic care, and other forms of assistance administered by provincial and federal governments.

If you are within ten or more years of retirement, you may want to consider “melting down” your RRSP. Several strategies exist. One such strategy sees an investor borrow to invest and pay the interest charges by making regular withdrawals from their registered investments. Since the interest charges are tax- deductible, they neatly offset the income tax payable on the RRSP withdrawals. 

When should you start a melt-down program? How much should you invest? We can help you crunch the numbers. If you feel you’re a candidate for this program, give us a call.~

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