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George Hatton CA, a financial planner in our office (who knows me well), =
has come up with the following. Think I will apply tomorrow.
Another former partner, Ross McDonald, in the CEN-TA office in =
Abbotsford, BC has also come up with some comments which I am adding to =
the end of George Hatton's comments. They are both seeming to say. =
"Take me now"!
ingram
=20
----- Original Message -----=20
From: George Hatton=20
To: [email protected]=20
I think you have forgotten the time value of money in your consideration =
of this question. The calculation is that the amount of money received =
will be approximately equal at age 84 if you begin to draw at age 60. =
The life expectancy of a 60 year old male, 5'8" and 195 lbs non-smoker, =
no heart condition and good driving record is 83.8 years. Go figure. It =
is true that, by not taking it now, you will receive more if you live =
past your life expectancy, but how will you truly benefit? With =
inflation at the current amount of about 3%, what will the extra money =
buy? If you do live beyond 84, will what you will be able to buy have =
any relevance in your life? Is it not better to draw the money now when =
you can enjoy the benefit? As for the potential draw back of OAS, while =
the theory is correct, the reality is likely very small, unless the =
current income is very high and destined to remain so. In that case, =
the question is really not particularly valid as the impact of the extra =
income is likely negligible in either case. If the money is not needed =
now, a better scenario would be to draw the CPP, and invest the net =
after tax. If the space is available, the amount could go to an RRSP =
and be tax neutral while drawn down. As you know, the RRIF can pass to =
the spouse tax sheltered at time of demise. If there is no RRSP space, =
then the net amount could go to a tax effective investment that can =
increase income flow without having a major impact on taxable income, =
and thus on tax, claw back, or nursing home rental. The higher CPP =
subject to claw back, because of waiting, could also be wasted in higher =
nursing home rent, a rather vicious form of taxation of old taxpayers!
As for you, why not take the CPP now as your life expectancy is about =
78.4 years. You will likely win mathmatically. The extra cash could mean =
that you would have to work less, and thus you may live longer! Unless, =
of course, you are a philanderer or gad about, in which case you'll be =
enjoying life better now than later, and the extra cash could assist to =
support your extracurricular activities.
The old adage that a bird in the hand is better than a bird in the bush =
is most apt here!
George
Thanks George, Ross McDonald adds the following as well
----- Original Message -----=20
From: Ross McDonald=20
To: [email protected]=20
Hi David,
Re the CPP question. Another thing to consider, especially when you are =
self employed, is that between 60 and 65, if you elect not to collect, =
you could potentially pay in approximately $3500 x 5 years ($17,500) - =
and although this amount is deductible in one form of another it is =
still a significant cost and will add to the number of years you have to =
live to "break even" compared to collecting early. In order to collect =
early however you have to "quit" working for at least one month and have =
an earned of under $800 for that month. Yet another consideration is =
that collecting early will reduce the CCP Disability payments you may be =
receiving or be eligible for.
Ross
-----Original Message-----
From: [email protected] =
[mailto:[email protected]]On Behalf Of =
[email protected]
Sent: December 26, 2003 4:03 PM
To: CENTAPEDE
Subject: Canadian wants to know when he should take out =
CanadaPension Plan from www.Jurock.com 'Ask an Expert' ask an income tax =
guru specialist cpnsultant experts
QUESTION: Is someone better off taking their Canada Pension at age 60 =
or wait until 65? I am 60 years and am on a modest company pension. I =
have a small income from GIC's and other investments. If I understand =
correctly, If I start collecting CPP now at a reduced amount, at the end =
of twenty years I will have collected the same total amount as I would =
have if I started collecting at age 65 years. Thanks.
=
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david ingram replies:
You will either like the answer or not like it. I am 61 and can't =
make up my mind either. If you die before you are 65, there is no doubt =
that you would have been better off taking it now.
I have decided to keep on contributing because I can and am still =
working. If I was retired and not going to work anymore, I am pretty =
sure I would take it now.
A small thing but there nevertheless is that taking a smaller amount =
for ever could result in less clawback of the old age pension when you =
hit 65.
Not much help but there it is. I think you should take it now unless =
you can tell me what day you are going to leave this mortal earth, in =
which case we could calculate your options exactly.
If you know you are going to live till 90 for instance, you are =
definitely better off waiting longer to start. =20
On the other hand, if you are a philanderer and might get shot by an =
irate husband next week, you should definitely start now.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader & =
the author and any and all non-contractual duties are expressly denied. =
All readers should obtain formal advice from a competent financial, or =
real estate planner or advisor & appropriately qualified legal =
practitioner, tax or immigration specialist in connection with personal =
or business affairs such as at www.centa.com. If you forward this =
message, this disclaimer must be included."
This from "ask an income tax and immigration and bankruptcy expert" =
from www.centa.com or www.jurock.com or www.featureweb.com. Canadian =
David Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems for =
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Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and =
Canadian and Mexican and any of the 43 states with state tax returns, =
etc.
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Bay and Dallas Taxman and Tax Guru Your name has been added to our =
email list because of an enquiry we have received, we may not answer =
your question but=20
another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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