In the span of just six years the RRSP has gone from useful to useless when it comes to the average Canadian saving for retirement says tax expert
Advisors weren’t too happy about the rollback of the TFSA annual contribution from $10,000 to $5,500 and if one tax expert is right the federal government might have cost Canadians a ton of retirement income.
Jamie Golombek, the head of CIBC Wealth Advisory Services’ tax and estate planning, questions the need for an RRSP suggesting many are better off contributing to a TFSA.
Why bother asked Golombek Tuesday in an op-ed for the Financial Post.
“Quite simply, for many Canadians attempting to save for retirement, a TFSA may be the better option,” wrote Golombek. “The amount you can contribute to a TFSA is based on your “TFSA contribution room.” If you were 18 or older in 2009 and, as of 2016, have not yet opened up a TFSA, you can immediately contribute up to $46,500 to a TFSA, consisting of $5,000 of accumulated room for each of 2009 through 2012, $5,500 for 2013 and 2014, $10,000 for 2015, and the recently-reduced $5,500 limit for 2016.”
But that’s not the only reason why a TFSA is generally more attractive than an RRSP to middle-income Canadians.
Your clients can withdraw funds from a TFSA to pay for emergencies tax-free and then re-contributed in future years without penalty while an RRSP withdrawal is taxed at their current rate and cannot be re-contributed unless they have unused contribution room.
Most importantly, who wants to deal with taxes in retirement when you could be enjoying the fruits of 40 years or more working full-time?
Not many.
Jamie Golombek, the head of CIBC Wealth Advisory Services’ tax and estate planning, questions the need for an RRSP suggesting many are better off contributing to a TFSA.
Why bother asked Golombek Tuesday in an op-ed for the Financial Post.
“Quite simply, for many Canadians attempting to save for retirement, a TFSA may be the better option,” wrote Golombek. “The amount you can contribute to a TFSA is based on your “TFSA contribution room.” If you were 18 or older in 2009 and, as of 2016, have not yet opened up a TFSA, you can immediately contribute up to $46,500 to a TFSA, consisting of $5,000 of accumulated room for each of 2009 through 2012, $5,500 for 2013 and 2014, $10,000 for 2015, and the recently-reduced $5,500 limit for 2016.”
But that’s not the only reason why a TFSA is generally more attractive than an RRSP to middle-income Canadians.
Your clients can withdraw funds from a TFSA to pay for emergencies tax-free and then re-contributed in future years without penalty while an RRSP withdrawal is taxed at their current rate and cannot be re-contributed unless they have unused contribution room.
Most importantly, who wants to deal with taxes in retirement when you could be enjoying the fruits of 40 years or more working full-time?
Not many.
