Lifestyle | More than $ 6,000 in RRSPs (and threatened with dismissal)

“I used my RRSPs [régime enregistré d’épargne-retraite] and it’s still $ 6,000, ”Nicole* wrote to us. His tax-free savings account (TFSA) has no better stock: $ 5,000. She is 77 years old and lives alone.

Posted at 6:00 am

Marc Tison

Marc Tison
The Press

The situation

Nicole does not have an employer pension plan.

He does not have his own house or car.

But far from him to mourn his fate.

He lives in a three -bedroom apartment with a low rent: $ 635.

“It’s right in my taste, because I’m a person who is right in myself, she confides. I do weaving, knitting, I can sew, I can paint. I’m not bored. »

A cloud looms, however.

“There may be changes in the building. It is a small building where there are only four or five tenants. The owner will change his mind at some point.»

He gives all the clues. The apartment of one of the tenants has been repossessed. Two others received eviction notices.

“I know if I move, it will be more expensive. »

His costs total $ 15,000 a year, he initially estimated. But following the phone interview, an email exchange instead pegged them to approximately $ 23,500.

In addition to his rent ($ 7,600 per year), he spends $ 770 on electricity and $ 1,200 on telecommunications. For the rest, “it’s the grocery store and the drugstore, but since I have a hobby of weaving and knitting, there are costs on that side. These are my luxuries ”.


Revenues in 2021

QPP: $ 12,830
PSV: $ 7487
RRIF withdrawal: $ 3,840
GST and Solidarity credits: $ 1,475
One -time payment to seniors over the age of 75 from Employment and Social Development Canada: $ 500
No Income Supplement Guarantee


RRSP: $ 6,000
TFSA: $ 5,000

These luxuries, however, do not seem excessive.

“Good, not bad,” he corrected. It was about $ 4,000 last year. I have to slow down. »

For the most part, his income comes from pensions from Régie des rentes du Québec (RRQ, $ 12,530) and the Old Age Security Pension (PSV, $ 7,500).

In 2021, he withdrew $ 3,840 from his RRSP, at $ 480 per month through September. His RRSP has shrunk to $ 6,000, now he plans to withdraw only $ 300 a year.

“So far, things are going well. But I say to myself: you know, you’re close to the end. So how long is left to live? Maybe 10 to 15 years. And maybe at some point it will go down. This is normal. So there, I said to myself: you must be thinking of something. »

Let us be reassured: this is something ominous. Proceeds from the sale of the land worth $ 900,000 will be distributed to him and his siblings. According to their calculations, they expect to get $ 150,000 each.

“I have no plans to invest, but I want to have an opinion on what I can do. What should my strategy be? How much should I set aside for rent?

“With the rising cost of living, what percentage should we expect for the coming years?»

Will need to provide money for a will, a transfer, insurance, he says.

“These questions may seem simple to you, but I want to have your opinion to help me see things more clearly.»

Nothing simplistic when silence and security are at stake.

The answer

This $ 150,000 falling from the sky will allow Nicole to create a more comfortable budget. In a nuance, however: “It depends on what’s on the horizon,” comments planner Nathalie Bachand, from the firm Bachand Lafleur, Groupe conseil.

We don’t know when this amount will reach our septuagenarian’s wallet.

But first let’s see what good it can do him.

A small amount can be set aside for will and transfer costs that Nicole is considering – say $ 5,000.


Nathalie Bachand, from Bachand Lafleur, Consulting Group

With a balance of $ 145,000, “if he receives the money in the next few months or before the end of the year, he will fill out his TFSA,” the planner advises.

For someone who has not contributed to it before, the cumulative rights amount to $ 81,500.

Since we do not know Nicole’s TFSA performance and withdrawal history, we will assume that the $ 5,000 she holds matches the rights exercised. So he could pay another $ 76,500 here in 2022. The balance, held outside the TFSA, will be subject to income tax.

How can this $ 145,000, carefully invested, improve his fortune?

The planner makes a simple calculation: “Considering inflation, return and a small tax, you can roughly divide the amount by the number of years.»

Upon reaching 77, Nicole has a 25% chance of reaching 96. From this perspective, $ 145,000 would get her $ 7,630 a year, or $ 635 a month. With the $ 635 he currently spends on it, he can afford to pay rent of approximately $ 1,270 per month.

Waiting for…

But if that amount doesn’t come out in two or three years, how can Nicole survive an eviction?

“He doesn’t have a lot of assets,” Nathalie Bachand said. It starts with maximizing government rent. »

He was also surprised that Nicole was not receiving the Guaranteed Income Supplement. “With the income of this order, he should receive about $ 1,500 from GIS.»

Perhaps his withdrawal from the RRSP deprived him of it? he suggested.

The SRG value is set to 1eh July for the next 12 months (excluding the quarterly adjustment for inflation), based on last year’s income.

“For example, his revenue in 2022 determines his GIS from July 2023 to June 2024,” the planner said.

To get the maximum amount as soon as possible, he suggests that Nicole withdraw the $ 6,000 she still has in RRSPs this year.

“He will pay approximately $ 700 to $ 800 in tax for fiscal year 2022, but after filing his return in 2023 where he declared no RRSPs, he will be able to recover the Guaranteed Income Supplement of approximately $ 3,500 from July 2024. ”

However, there is a way to win in a year.

“It is possible to request that the GIS be based on revenue estimates for the current year and not the previous year,” he added.

This request is made using the ISP-3041 form, which is only available by direct request to Service Canada. “You can’t find it online. You have to call and they will post it.»

So Nicole can request from 2023 that the SRG application be based on her estimated income for the current year. “This will have the effect of recovering $ 3,500 GIS in July 2023 and not July 2024.”

Nicole will receive an income of approximately $ 24,500 in 2023 and $ 25,500 in 2024, which will allow her to spend approximately $ 800 per month on her rent. He may need to temporarily restrict his leisure spending.

Waiting for better …

* Although the case highlighted in this section is true, the first name used is only fictional.

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