Author Topic: Reader Case Study - Canadian couple in 30s retirement plan  (Read 2952 times)

Mbdlivingstone

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Reader Case Study - Canadian couple in 30s retirement plan
« on: April 19, 2019, 04:10:25 PM »
Any help would be appreciated. I will include some info only relevant to the Canadian tax system, so feel free to disregard if you're not familiar with it.

We are a Canadian couple, ages 32, and 28, with no children, currently living in British Columbia.

We have 600,000 in investments, no debt, and no other assets. Approximately 150,000 in our RRSPs, 100,000 in TFSAs and 350,000 in our joint taxable account. We are 100% in equity ETFs, specifically 80% in XAW (MSCI All-Country World Index Ex- Canada) and 20% in VCN (Canada Total stock market), which we have in the taxable account since Canadian dividends are taxed favourably. We have no other income.

We intend to live a very low cost lifestyle by continuously traveling abroad, staying in low cost countries and doing work exchanges for free food and shelter, such as Workaway.info or WWOOF. By not staying too long in any one country and not working for money, we will remain tax residents of Canada, which we think is favourable with low income. We will not have any property other than what's in our backpacks. We will keep travel costs very low by moving slowly and in small steps by bus or train.

Our withdrawal strategy is as follows:
We will have a mix between a variable withdrawal strategy at 4%, and a constant withdrawal strategy at 2%. How it will work is we will become comfortable living at 2% of our initial portfolio value; all of our essential expenses will be covered by this. At 600,000 this would be 12,000. Once we are comfortable with this, we can apply the variable withdrawal strategy at 4%, which applies a 4% spending rate to the portfolio value each year, but anything beyond 12,000 will be entirely discretionary expenses and we likely won't use it all. These might seem like very conservative spending rates but we want our money to grow so we have more when we are older or have children.

We have been logging every expense in our spreadsheet for years and we have a really good grasp on where our money goes and our habits. We have a running spending average and compare it to our total portfolio value daily.

The taxes will be entirely under our control. In Canada, everyone has 12,069 of income as of 2019, indexed to inflation, that they can earn tax free (Basic Personal Amount). Anything that we withdraw from our RRSP is taxable so we would withdraw from that first. The strategy is, every December we will withdraw 24,138 from our RRSPs, indexed to inflation. We will calculate what we are entitled to spend the next year, and reinvest the rest into our taxable account, until our RRSPs are depleted, tax-free. This strategy works for us because we want to spend very little in the first years of retirement and gradually increase it as we age.

We will have health insurance for outside North America. For those who don't know, the rest of the world is way cheaper than North America for healthcare, often providing superior service. We can get a decent insurance plan for around $2000/year. (IMG Global)

We don't have any specific questions. We have done a lot of research and think we have a good plan, but we are open to any criticism as we want to improve as much as possible.

Thank you!

Matt and Sylwia

Goldielocks

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #1 on: April 19, 2019, 05:31:52 PM »
Having a withdrawal plan and acting on it are two different things, I have found.   Your plan sounds reasonable, but likely to cause stress for a few years.

I recommend withdrawing 2-3years of that 2% amount  ($36k?) into a savings account, and then deciding to live off of that for 3 years.

If you can make it, great. Proceed as planned.  If you can't, you will know by watching the actual savings account go down faster than your 36 months. It will be easy to make new plans then, with your new knowledge.

 it took me at least 20 months to figure out what my new annual expenses are after FIRE.   Along the way you will be surprised at what you can cut out to make the money last, and surprised at what you assumed you could cut that you can't... or things that you actually ADD that make your life more enjoyable that you never thought of.


Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #2 on: April 19, 2019, 06:07:45 PM »
Having a withdrawal plan and acting on it are two different things, I have found.   Your plan sounds reasonable, but likely to cause stress for a few years.

I recommend withdrawing 2-3years of that 2% amount  ($36k?) into a savings account, and then deciding to live off of that for 3 years.

If you can make it, great. Proceed as planned.  If you can't, you will know by watching the actual savings account go down faster than your 36 months. It will be easy to make new plans then, with your new knowledge.

 it took me at least 20 months to figure out what my new annual expenses are after FIRE.   Along the way you will be surprised at what you can cut out to make the money last, and surprised at what you assumed you could cut that you can't... or things that you actually ADD that make your life more enjoyable that you never thought of.

Thanks a lot Goldielocks. I completely agree with your concern. I believe all the numbers work out and we have reasonable expectations for our investments, so all that is left to be concerned about is whether or not our projections for spending are accurate.

We still haven't decided on what to keep in the savings account, but keeping a few years does seem like a stress-free approach to testing out our spending rates, we will keep it in mind.

The thing about a variable spending strategy, or any that's beings constantly monitored and adjusted, is that if we don't hit our targets, we can instantly make adjustments. For us it would be doing more work exchange programs, but if that's not enough we could always get jobs for a little while.

Also, there is a large margin of error built into this strategy. We could spend more without depleting our portfolio, I believe.

Thanks again!

Freedomin5

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #3 on: April 19, 2019, 07:19:39 PM »
It is unclear from your post whether or not you have lived abroad in a low-cost country on a work exchange before. If you haven't, I would suggest that you take some time to live abroad for a few months in a low-cost country of your choice to get firsthand experience. Sometimes what you think it will be like and what it actually will be like is very different. I would recommend test-driving your FIRE plan first.

I live in a low-cost country and have taken on low-paying jobs that provide food and housing. Based on your opinion on the superior quality of healthcare in developing countries, I'm not sure if you actually have firsthand experience of the healthcare system in a developing country, or whether you're basing statement on general opinion.


Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #4 on: April 19, 2019, 07:48:49 PM »
It is unclear from your post whether or not you have lived abroad in a low-cost country on a work exchange before. If you haven't, I would suggest that you take some time to live abroad for a few months in a low-cost country of your choice to get firsthand experience. Sometimes what you think it will be like and what it actually will be like is very different. I would recommend test-driving your FIRE plan first.

I live in a low-cost country and have taken on low-paying jobs that provide food and housing. Based on your opinion on the superior quality of healthcare in developing countries, I'm not sure if you actually have firsthand experience of the healthcare system in a developing country, or whether you're basing statement on general opinion.

Freedomin5,
You are absolutely right, and these are our concerns as well.

We have travelled a lot, but we have not had to rely on the healthcare systems abroad; we are relying on general opinion. We also haven't done the work exchanges before so we can't be positive that will work out.

We don't know until we try these things and when we get a chance we would like to before we quit our jobs.

Unfortunately, until we have actually quit our jobs, we can't really test the consistent reliability of these things. I think we will just have to do our best to research and try it. We can always come back to Canada and get jobs if it doesn't work out.

What is your experience living in a low cost country and working for food and housing? Is $1000 per month enough?

Thank you

Goldielocks

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #5 on: April 20, 2019, 12:20:56 AM »
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I think we will just have to do our best to research and try it.
I think you are ready and equipped with the finances to stop researching and to try it.  Reality will be different than you think (maybe better, for certain different).  You need to try it for 2-3 years and then make the longer term plan.

Freedomin5

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #6 on: April 20, 2019, 01:12:29 AM »
I'm not a fan of the healthcare systems abroad. Many of the developing countries simply to not have the educational system to train up quality medical professionals. They are good at basic healthcare, and it is quite cheap, but the equipment they use is often old, which means that there is a higher chance of misdiagnosis. I've typically found that US, Canadian, British, or Australian trained medical professionals tend to be most up-to-date in terms of their medical knowledge. In addition, potential language barriers (depending on the country you end up in) makes it very hard to communicate with nursing staff and medical professionals, and in a medical emergency situation, you really do not want to miss any potentially critical information.

I can't say much about Thailand though. I've heard that because they are a medical destination, the quality of care and equipment tends to be better, but I don't have firsthand experience with that.

Working for food and housing is fine. You'll probably also be paid a stipend. You have to be really flexible and just expect that no one will do things the way they "should" be done. Pay a fee/bribe to get your visa -- sure. Run around to fifty different authorities to get various official stamps. Why not? As long as you are flexible and don't question the way things are done, you'll be fine.

$1000/month should be doable, as long as you don't expect to eat at Western restaurants or eat fancy stuff like cheese or peanut butter very often. If you're willing to eat what the locals eat, then it should be fine. I remember when the import store that was a 1-hour bus ride away started carrying cheese. We stood in the cheese aisle and cried tears of happiness.

Since both of you are still working, if you have vacation time, I would start doing two or three week trips to the countries that you may want to live in. Ideally, do a work exchange or a volunteer trip (e.g., Habitat for Humanity) and see how it's like to live like the locals.

Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #7 on: April 20, 2019, 04:29:30 PM »
Quote
I think we will just have to do our best to research and try it.
I think you are ready and equipped with the finances to stop researching and to try it.  Reality will be different than you think (maybe better, for certain different).  You need to try it for 2-3 years and then make the longer term plan.

I'm glad you think we are ready to try out the plan, Goldielocks. Thank you and we will try to go forward with caution before committing ourselves to anything long-term.

Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #8 on: April 20, 2019, 04:36:22 PM »
I'm not a fan of the healthcare systems abroad. Many of the developing countries simply to not have the educational system to train up quality medical professionals. They are good at basic healthcare, and it is quite cheap, but the equipment they use is often old, which means that there is a higher chance of misdiagnosis. I've typically found that US, Canadian, British, or Australian trained medical professionals tend to be most up-to-date in terms of their medical knowledge. In addition, potential language barriers (depending on the country you end up in) makes it very hard to communicate with nursing staff and medical professionals, and in a medical emergency situation, you really do not want to miss any potentially critical information.

I can't say much about Thailand though. I've heard that because they are a medical destination, the quality of care and equipment tends to be better, but I don't have firsthand experience with that.

Working for food and housing is fine. You'll probably also be paid a stipend. You have to be really flexible and just expect that no one will do things the way they "should" be done. Pay a fee/bribe to get your visa -- sure. Run around to fifty different authorities to get various official stamps. Why not? As long as you are flexible and don't question the way things are done, you'll be fine.

$1000/month should be doable, as long as you don't expect to eat at Western restaurants or eat fancy stuff like cheese or peanut butter very often. If you're willing to eat what the locals eat, then it should be fine. I remember when the import store that was a 1-hour bus ride away started carrying cheese. We stood in the cheese aisle and cried tears of happiness.

Since both of you are still working, if you have vacation time, I would start doing two or three week trips to the countries that you may want to live in. Ideally, do a work exchange or a volunteer trip (e.g., Habitat for Humanity) and see how it's like to live like the locals.

Thanks a lot for sharing your experience. Healthcare is the greatest concern. I've heard many testimonials of certain countries being good/bad, but we will have to try it ourselves to be sure. I didn't mention that my wife is originally from Poland and has her citizenship there as well, and in her experience, the healthcare system is fairly good and cheap there. Also it's a low-cost country, so I guess one of us does have some experience in that regard -I didn't think about it earlier.

We are glad you think $1000 is doable. We will try our best to follow your advice for using our vacation time for trying out volunteering abroad. It's a great idea and we should definitely do it as soon as possible. We both think we will enjoy this lifestyle and have spent time in poor countries but we don't really know until we try.

Thank you again for your help.



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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #9 on: April 21, 2019, 11:21:04 PM »
For healthcare, my aunt and uncle, who lived in developing countries / less stable countries for 20 years, ... their solution was to plan to travel to a nearby country with EXCELLENT healthcare up to 3 times per year... for health care, dental, etc.   They built it into their budget.

In their case, this meant going to Australia, New Zealand, and, their preferred... Singapore. 

You are young.  You will figure this out.

Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #10 on: April 22, 2019, 07:55:08 AM »
For healthcare, my aunt and uncle, who lived in developing countries / less stable countries for 20 years, ... their solution was to plan to travel to a nearby country with EXCELLENT healthcare up to 3 times per year... for health care, dental, etc.   They built it into their budget.

In their case, this meant going to Australia, New Zealand, and, their preferred... Singapore. 

You are young.  You will figure this out.

Thanks Goldielocks. My thoughts exactly. We don't have it all figured out yet but I'm sure we can find certain countries that we like to go to for healthcare and eventually work out a system. It's really only US and Canada that are excluded from most low-cost global health insurance plans that I've seen, so the countries you mentioned would be good options. Also we were thinking of frequenting Poland since all my wife's family is there anyway, and it's a good option for good/cheap healthcare.

FreelanceToFreedom

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #11 on: May 19, 2019, 06:53:52 AM »
Sounds like an adventure! Best of luck. I'm a digital nomad so I have some experience with all this, but I'm still working 10-20 hours a week. If you have family in Poland, that region is a great place to start. I've really enjoyed Poland, Bulgaria and Romania personally - and they're all quite affordable compared to Canada.

A few thoughts.

1. Math and the Canadian tax system are certainly not my strong suits, but you may want to run some numbers on your plan to withdraw from RRSPs first. It may be that allowing that money to grow tax-deferred is more beneficial in the long-run than using it up first. Not sure how the numbers work out though.

2. Depending on your skill set it'd be possible to work remotely/freelance here and there for some spending money. In low cost of living countries, two people working 1/2 time for room and board may not actually make much financial sense, as you could buy the same type of lodging + food for maybe $35-50 CAD a day. You could make far more than that even doing something basic like virtual assistant work, and then just stay in long-term Airbnb's or similar. Hone a skill like freelance writing or design and you could probably cover food/lodging expenses with 1-2 hours of work per day each.

3. Likewise, I'm sure Workaway is a good option and I plan to use it myself in the future, but you probably won't want to ALWAYS be doing that. See above.

I've only been traveling full time for about 6 months now but plan to make it a long term lifestyle. Let me know if you have any questions!


Goldielocks

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #12 on: May 21, 2019, 03:15:10 AM »
RE RRSP withdrawal plan..

For most people, if you will have your RRSP invested for 15-20+ years (or more), then keeping the money there longer makes a lot of sense (numbers), in terms of gains due to tax free growth..

At age 50, start to figure out what your RRSP withdrawal plan for the next 30 years will look like. The biggest tax hit is after you and your spouse are dead.   It is taxed as income on your final tax return... although your executor can go back 3 years to mitigate it... it can be a large top marginal tax rate hit.   

But! you don't even need to worry about that for 20 years yet.  Just focus on growing it for now.

Lews Therin

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #13 on: May 21, 2019, 09:45:08 AM »
We are a Canadian couple, ages 32, and 28, with no children, currently living in British Columbia.

We have 600,000 in investments, no debt, and no other assets. Approximately 150,000 in our RRSPs, 100,000 in TFSAs and 350,000 in our joint taxable account. We are 100% in equity ETFs, specifically 80% in XAW (MSCI All-Country World Index Ex- Canada) and 20% in VCN (Canada Total stock market), which we have in the taxable account since Canadian dividends are taxed favourably. We have no other income.

The taxes will be entirely under our control. In Canada, everyone has 12,069 of income as of 2019, indexed to inflation, that they can earn tax free (Basic Personal Amount). Anything that we withdraw from our RRSP is taxable so we would withdraw from that first. The strategy is, every December we will withdraw 24,138 from our RRSPs, indexed to inflation. We will calculate what we are entitled to spend the next year, and reinvest the rest into our taxable account, until our RRSPs are depleted, tax-free. This strategy works for us because we want to spend very little in the first years of retirement and gradually increase it as we age.


I recommend you give yourself some wiggle room with the RRSPs, and not simple take the max RRSP amount per year. you have decades to pull out those RRSPs, and you will burn through them really quickly, so you might as well make sure you take into account dividends/capital gains.

You could calculate dividends, and then pull out the amount left-over that you need to bring you close to 12k. (at 24k a year, your RRSP will be empty before 50s, and you'd still have decades to pull them at 0%, so there's no need to take out the minimum amount, and then pay taxes on your dividends (even if they are favorably taxed, they are even more favorably taxed if you are in the 0% bracket).

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #14 on: May 23, 2019, 08:22:37 PM »
Poland is a beautiful cheap country if you stay out of the major cities.

Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #15 on: June 12, 2019, 10:51:12 PM »
Sounds like an adventure! Best of luck. I'm a digital nomad so I have some experience with all this, but I'm still working 10-20 hours a week. If you have family in Poland, that region is a great place to start. I've really enjoyed Poland, Bulgaria and Romania personally - and they're all quite affordable compared to Canada.

A few thoughts.

1. Math and the Canadian tax system are certainly not my strong suits, but you may want to run some numbers on your plan to withdraw from RRSPs first. It may be that allowing that money to grow tax-deferred is more beneficial in the long-run than using it up first. Not sure how the numbers work out though.

2. Depending on your skill set it'd be possible to work remotely/freelance here and there for some spending money. In low cost of living countries, two people working 1/2 time for room and board may not actually make much financial sense, as you could buy the same type of lodging + food for maybe $35-50 CAD a day. You could make far more than that even doing something basic like virtual assistant work, and then just stay in long-term Airbnb's or similar. Hone a skill like freelance writing or design and you could probably cover food/lodging expenses with 1-2 hours of work per day each.

3. Likewise, I'm sure Workaway is a good option and I plan to use it myself in the future, but you probably won't want to ALWAYS be doing that. See above.

I've only been traveling full time for about 6 months now but plan to make it a long term lifestyle. Let me know if you have any questions!



Thank you for your advice! A few people commented on RRSPs in more detail so I will address that in a moment. As for your second point: we are concerned with taking employment in other countries because if we don't properly do our research we could trigger residency in that country, which could cause a complicated tax situation. I suppose most people get away with working under the table while traveling, but honestly I don't know much about it. Any advice with regards to that?

RE RRSP withdrawal plan..

For most people, if you will have your RRSP invested for 15-20+ years (or more), then keeping the money there longer makes a lot of sense (numbers), in terms of gains due to tax free growth..

At age 50, start to figure out what your RRSP withdrawal plan for the next 30 years will look like. The biggest tax hit is after you and your spouse are dead.   It is taxed as income on your final tax return... although your executor can go back 3 years to mitigate it... it can be a large top marginal tax rate hit.   

But! you don't even need to worry about that for 20 years yet.  Just focus on growing it for now.

Thank you for the RRSP advice, but it relies on the assumption that we will have the RRSPs for the rest of our lives. We don't think we will have the RRSPs for long, and that's partially why we are trying to do this. We are fairly certain we don't want to settle in Canada and will probably settle in Poland or another country of our choosing. This being the case, assuming we will settle in one of these countries in the next 10 years, do you think our plan makes sense? If we manage to take that money out tax-free prior to expatriating, then we avoid a 25% hit on the entire value of the RRSP.

I recommend you give yourself some wiggle room with the RRSPs, and not simple take the max RRSP amount per year. you have decades to pull out those RRSPs, and you will burn through them really quickly, so you might as well make sure you take into account dividends/capital gains.

You could calculate dividends, and then pull out the amount left-over that you need to bring you close to 12k. (at 24k a year, your RRSP will be empty before 50s, and you'd still have decades to pull them at 0%, so there's no need to take out the minimum amount, and then pay taxes on your dividends (even if they are favorably taxed, they are even more favorably taxed if you are in the 0% bracket).

Thanks for the advice. I agree about calculating the dividends and capital gains first. I actually made a spreadsheet to calculate all that and to determine what I should withdraw from the RRSPs. I left all that out because I didn't think it would be interesting to people, but I definitely agree. This way it's truly $0 in taxes per year.

Poland is a beautiful cheap country if you stay out of the major cities.

Yeah it is! We've been there a couple times together and loved it.

Goldielocks

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #16 on: June 13, 2019, 02:43:49 PM »
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If we manage to take that money out tax-free prior to expatriating, then we avoid a 25% hit on the entire value of the RRSP.
How do you manage this magic?  Tax free?  Is it because of pulling $'s during very low tax years?  I have managed to pull about $20k/yr out of the RRSP in low tax years, and pay about 10% tax..   In general, you have to pay tax on it for withdrawal, because you had a savings in the year of contribution. 

Sometimes pension rollovers exist, when you get some or all those taxes back in your new country. (or at least a tax offset).

I don't know Poland's tax treaty situation with Canada.   However, for many countries, the RRSP is recognized as a pension fund, and regular payments from it to you, in future, in your new country would be taxed like a pension plan sourced in your own country.  Any Cdn taxes withheld (if any, depending on tax treaty) when you do so are usually reported as "foreign taxes paid" in your new country's annual tax return... and you get a credit for them against your taxes owing.


Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #17 on: June 13, 2019, 03:18:24 PM »
How do you manage this magic?  Tax free?  Is it because of pulling $'s during very low tax years?  I have managed to pull about $20k/yr out of the RRSP in low tax years, and pay about 10% tax..   In general, you have to pay tax on it for withdrawal, because you had a savings in the year of contribution. 

Sometimes pension rollovers exist, when you get some or all those taxes back in your new country. (or at least a tax offset).

I don't know Poland's tax treaty situation with Canada.   However, for many countries, the RRSP is recognized as a pension fund, and regular payments from it to you, in future, in your new country would be taxed like a pension plan sourced in your own country.  Any Cdn taxes withheld (if any, depending on tax treaty) when you do so are usually reported as "foreign taxes paid" in your new country's annual tax return... and you get a credit for them against your taxes owing.

Hi Goldielocks. It makes sense that you paid roughly 10% because you were at least $8000 over the Basic Personal Amount, depending on what year this was, assuming there was no other income. Our intention is to stay below the Basic Personal Amount, giving us over $12,000 each of tax-free income in 2019.

I'm not sure about your last paragraph but I will look into that more. From what I've read, I was under the impression that Canada usually taxes the RRSPs for non-residents at a flat rate, depending on the treaty. I've looked through these treaties and almost all of the countries have the rate set at 25%, New Zealand was one exception at 15%. I think you can take the money out gradually, but since every gain in the RRSP will be taxed at 25%, regardless of your income, it seems like a better idea to withdraw it all at once, or if I can withdraw it prior to that at close to 0%, even better. I will look into what you said; maybe there are other options.

Thanks again!


Goldielocks

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #18 on: June 17, 2019, 12:14:18 PM »
Quote
Hi Goldielocks. It makes sense that you paid roughly 10% because you were at least $8000 over the Basic Personal Amount, depending on what year this was, assuming there was no other income. Our intention is to stay below the Basic Personal Amount, giving us over $12,000 each of tax-free income in 2019.

Right.  The first $11k+ amount is tax-free, assuming zero other income.   That is how I ended up with 10%, because I pulle $20k on top of a bit of other income in a low year.

For most people, these strategies don't really matter if all you are pulling out is $12k each per year, and you have no income..   Actually, if your income is that low, then you may qualify for a lot of free government money (reverse taxes), and would be better off financialy staying in Canada.

There are many countries with a 15% tax treaty with Canada... mostly commonwealth historic ones, though.
The key is if your own tax country allows you to claim the 15% or 25% as a tax credit, so you don't pay double tax (UK's tax treaty with Canada is actually one to eliminate double tax, for example).

Mbdlivingstone

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #19 on: June 17, 2019, 02:21:25 PM »
Quote
Hi Goldielocks. It makes sense that you paid roughly 10% because you were at least $8000 over the Basic Personal Amount, depending on what year this was, assuming there was no other income. Our intention is to stay below the Basic Personal Amount, giving us over $12,000 each of tax-free income in 2019.

Right.  The first $11k+ amount is tax-free, assuming zero other income.   That is how I ended up with 10%, because I pulle $20k on top of a bit of other income in a low year.

For most people, these strategies don't really matter if all you are pulling out is $12k each per year, and you have no income..   Actually, if your income is that low, then you may qualify for a lot of free government money (reverse taxes), and would be better off financialy staying in Canada.

There are many countries with a 15% tax treaty with Canada... mostly commonwealth historic ones, though.
The key is if your own tax country allows you to claim the 15% or 25% as a tax credit, so you don't pay double tax (UK's tax treaty with Canada is actually one to eliminate double tax, for example).

As for the strategies. Even though we don't require them for our spending, I think it would be wise to still generate an income equal to the Basic Personal Amounts to take advantage of all the 0% tax and to avoid a higher tax bill in the future, especially when expatriating.



That's interesting. I never thought about the free money we could have by staying here. I will look into that. I suppose we would still want the freedom of travelling but I'm still curious about our entitlements.

Oh I see. I guess one good option might be to attempt to trigger residency in a country like UK for the RRSP, even if we won't stay there long term.

Goldielocks

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Re: Reader Case Study - Canadian couple in 30s retirement plan
« Reply #20 on: June 19, 2019, 10:14:38 AM »
Caveat  - the "free money" increases the most when you have kids or are age 65 with 40 years residency either here or in a tax treaty country with reciprocal terms (NZ, Malaysia, Aus, USA, etc). 

https://www.canada.ca/en/revenue-agency/services/child-family-benefits/child-family-benefits-calculator.html
In addition, there is free grant money for RESP's if you are a low income family, and excellent student loan terms including free money if you go to school "full time" (pass 3 classes a term).

OAS is $601/mo per person at age 65, increasing if deferred to later years.. but if you were 20 years living in canada after age 18, then they will pay it prorated out to you elsewhere in the world. So having 20 years resident in canada is a good plan if you are getting close to that, even if you move after.... 

CPP is based on earned credits and paid to you wherever you are in the world.

Basic healthcare covered for residents. !

Welfare is available, but you would not get much as a couple without a disabiity or kids, and morally, I am sure you would not want to take it if you can plan to avoid it (by moving to poland or using savings or whatever).