Retirement Planning Flashcards
Rule of thumb of retirement income
70-80% is comfortable for most.
OAS clawback (2024)?
15% on the excess above the threshold amount of $86,912
3 types of annuities?
- Term certain: payable to you or yur estate for a fixed number of years
- Single life: payable to you as long as you are alive
- Joint an last survivor life: payable while you or your spouse are alive
How many days of work and income before CPP must be paid into?
after 25 days must start paying in above 3500 in income EVEN IF A MIGRANT WORKER
CPP contribution period?
18-65 if working, even if you take CPP at 60 and continue working. This just increases your cpp payments
Reduction in CPP if taken early?
7.2% per year (0.6 per month)
Self-employed individuals cpp oblogation?
Double: they pay the employee and the employers portion
What is the YMPE?
The max amount you pay CPP on
What is CPP Year Basic Exemption (YBE)?
3500; cpp is not paid into on the first 3500 in income.
How to calculate CPP contribution?
income up to YMPE - 3500 X 5.95% (CPP contribution %)
Benefit of delaying cpp?
Increase of 8.4% annually (0.7% per month)
CPP in divorce?
Credit splitting: contributions made during cohabitation are equalized (starting from the beginning of the year in which they cohabitated until end of year prior to when they ceased)
When is orphan benefit received until? Benefit for being child of disabled contirbutor?
Child is 18 or 25 if enrolled in ful time post-secondary
Requirements for CPP death benefit?
Must have received CPP for 1/3 the years in your contributory period (and in case less than 3 years);
OR
10+ years
How is the pension adjustment calculated?
((Pensionable earnings X benefit rate) X 9) - 600 (adjustment)
What is excluded from a retirement allowance?
vacation pay
What is pension integration with CPP?
It is a bridge benefit if you retire before 65.
What are some variables that are always considered when comparing to retirement dates?
Discount rate
Inflation rate
Current marginal tax rate
marginal tax rate in retirement
Pension contribution formula
Estimated pension contributions in future years
Impact of additional RSP contributions on tax rate.
After tax incremental income
Factors to consider in deciding whether to take pension early?
- How will additional income be invested?
*Is there TFSA/RSP cont room for this income? - Risk that pension ill not longer be indexed; favours taking now
- life expectancy/health
- Risk profile: will the early payments earn a return or are they better left in the PP where people are more likely to be comfortable with the risk.
