BOC Hits 5% | Page 24 | GTAMotorcycle.com

BOC Hits 5%

TFSA is great and all but I am with MP, not many middle class people with a mortgage, kids, house repairs, renos, motorcycles, RESP.... have the kind of free cash flow to max it out. Even fewer people in classes below that.

If it was around before I owned property and had kids it would have been a great concept to invest for the down payment. So maybe that crowd is working it these days? Or people post mortgage with an empty house. Or more money than they can count.
 
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AllistonGT said:
Indexed to inflation. Went to $6500 last year and to $7000 this year. No inflation = no increase.

I wish we had the ability to mix our contributions between RRSP's and TFSA's as we see fit. So an overall limit instead of the government deciding limits for each.
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The limits are higher than most Canadians' free cash, you're in the top 1% if you can max both out each year. I think only 10% of Canadians save more than $5000/year, so the limits are probably above the 'middle class' income brackets -- those are the folks these savings plans are designed for.

Raising limits would benefit richer folks, but do little for the average Canadian.
 
backmarkerducati said:
TFSA is great and all but I am with MP, not many middle class people with a mortgage, kids, house repairs, renos, motorcycles, RESP.... have the kind of free cash flow to max it out. Even fewer people in classes below that.

If it was around before I owned property and had kids it would have been a great concept to invest for the down payment. So maybe that crowd is working it these days? Or people post mortgage with an empty house. Or more money than they can count.
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And this is why we need the Canada Pension Plan, and old-age security, which you have no choice but pay into.
 
Mad Mike said:
The limits are higher than most Canadians' free cash, you're in the top 1% if you can max both out each year. I think only 10% of Canadians save more than $5000/year, so the limits are probably above the 'middle class' income brackets -- those are the folks these savings plans are designed for.

Raising limits would benefit richer folks, but do little for the average Canadian.
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... and the CPP has an annual contribution limit, so that percentage-wise, it benefits lower-income people more than higher-income people. And when you're receiving it, it's treated as income, so again it benefits lower-income people more than higher-income people (who will end up in a higher tax bracket). And OAS has a clawback at high income levels.
 
Brian P said:
And this is why we need the Canada Pension Plan, and old-age security, which you have no choice but pay into.
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Sort of. Return on CPP investment is crap (and that assumes it doesn't collapse prior to your withdrawal and aren't in a situation to max CPP prior to stopping working in which case your return on those mandatory contributions is minus 100%). Mandatory saving at some level is a good idea. If you contribute $X per year to a locked account, you should be able to opt out of CPP contributions.

FWIW, it is possible to avoid paying into CPP without breaking any rules but you need to keep your income off a T4. I have chosen to go that route.
 
mimico_polak said:
I think the TFSA is a great program for those that are well off. Very few middle class people will have an extra 5k/year in after tax dollars to put away considering the cost of living. I know I don’t. Even less of the younger generation will have any spare money laying around.

There’s RESP, RRSP, TFSA, mortgages, cars, life etc. The 10k raise would only help those that are already well off. Very few have 5k laying around. Even less have 10k laying around with nothing to do.

I am forced to contribute 14.7% of my salary to OMERS. My employer matches it dollar for dollar. And I’m struggling to put away money after renovations and life takes the bulk of my paycheque.
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If youre 33 or older and maxed out your TFSA in a decent fund, you have around $200K tax-free.

If you did the same with RRSPs (and reinvested the tax-returned savings) you would have about $250K, but all of that is taxible as income as you draw it out -- probably 30% or more.

As for affording... if you have a mortgage, 3 kids, cars, bikes, cottages.... no -- there won't be much left over until the mortgage gets paid down and the kids leave home. If you have an OMERS pension obligation, your cash is bled off and invested for you -- your long term retirement fund is being managed for you so the need for RRSP and TFSA is considerably less.

If you're like most Canadians, investing for retirement (and that 14.7% income presumably) is in their hands to manage -- they are the ones that use and need RRSP/TFSA (if they have the discipline).
 
Brian P said:
...

I am of the view that it's better to own the bank than to put money in the bank. There are good dividend-payers among the Canadian banks, and thanks to our regulatory environment, they are unlikely to go bankrupt any time soon. But ... they are represented by common shares, and those fluctuate up and down. Ignore that, and collect the dividends. (In your TFSA, to the extent possible.)
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My thoughts exactly. you've gotten 5% on average with a little capital appreciation and very little risk. I like banks for the low-risk part of my investments,.
 
GreyGhost said:
...

FWIW, it is possible to avoid paying into CPP without breaking any rules but you need to keep your income off a T4. I have chosen to go that route.
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How do you accomplish that?

I looked a lot of dodges over the years, never found one for CPP other than falling below the income threshold.

If you're not using a T4, then you still have to report on a T2125 -- both get you clipped for CPP.
 
@mimico , OMERS is the best thing to ever happen to you , next to a nice Polish wife . 14% is a lot , wait till your 55 and see the joy it brings . Not many gold plated pensions around , stay in. I have this convo with my son ( he’s in the Alberta municipal workers pension) all the time . You may never save the kind of money they will park in your bank when you’re done .


Sent from my iPhone using GTAMotorcycle.com
 
Mad Mike said:
How do you accomplish that?

I looked a lot of dodges over the years, never found one for CPP other than falling below the income threshold.

If you're not using a T4, then you still have to report on a T2125 -- both get you clipped for CPP.
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Corporation (ideally with a year end not Dec 31), T5, holding company if you want to store money before you draw it.

As you work for someone else, get them to hire MM Inc for executive services. They save EI, CPP, Health tax, etc. You lose medical benefits. You and your wife can own MM Inc and your withdrawals can be entirely unrelated to your billings. Or you spin up a family trust and the kids can draw from MM Inc. Especially helpful if their income is down one year (parental leave, job loss, etc). As your kids are older, you may not even need the family trust, just give them non-voting shares in the corp.
 
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crankcall said:
@mimico , OMERS is the best thing to ever happen to you , next to a nice Polish wife . 14% is a lot , wait till your 55 and see the joy it brings . Not many gold plated pensions around , stay in. I have this convo with my son ( he’s in the Alberta municipal workers pension) all the time . You may never save the kind of money they will park in your bank when you’re done .


Sent from my iPhone using GTAMotorcycle.com
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Agreed. Unless someone offers me a stupid salary elsewhere I’m not going anywhere.

Unfortunately I’ll NEVER see the full pension from OMERS as I started too late and will never reach the magic number for full pension. Started at 41 so I need to work here until 65 minimum….

🤢

I can always go to another OMERS contributing company which would allow me to maintain my contributions and count toward retirement…but that’s a decision for future MP.

Interview went (I feel great), but still don’t think I’ll get it as my understanding is they have a candidate but need the smoke and mirrors of a ‘fair’ process. He’s a good guy so I’m happy for him if he gets it anyways.
 
mimico_polak said:
Agreed. Unless someone offers me a stupid salary elsewhere I’m not going anywhere.

Unfortunately I’ll NEVER see the full pension from OMERS as I started too late and will never reach the magic number for full pension. Started at 41 so I need to work here until 65 minimum….

🤢
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If you can get your mortage paid off, start dumping that cashflow into buying pension years. It won't take long to get many years off that number.
 
Mad Mike said:
How do you accomplish that?

I looked a lot of dodges over the years, never found one for CPP other than falling below the income threshold.

If you're not using a T4, then you still have to report on a T2125 -- both get you clipped for CPP.
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Holdco. Take very little salary. Dividends are not considered wages and not treated as such. I've contributed most years max CPP so at my age continuing to contribute has little to no benefit so mostly I've stopped. Downside is it creates no RRSP room but I'm not contributing anymore anyway. Also is a problem if applying for a mortgage or any loan as lenders don't consider dividends income.
 
mimico_polak said:
Interview went (I feel great), but still don’t think I’ll get it as my understanding is they have a candidate but need the smoke and mirrors of a ‘fair’ process. He’s a good guy so I’m happy for him if he gets it anyways.
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Fingers crossed for you!!
 
GreyGhost said:
If you can get your mortage paid off, start dumping that cashflow into buying pension years. It won't take long to get many years off that number.
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I can do that now from my old pension plan. There’s 100k there…they just make the paperwork so onerous it’s a ludicrous hassle.

But yes. It would cost me about 50-60k to buy back the years.
 
mimico_polak said:
Agreed. Unless someone offers me a stupid salary elsewhere I’m not going anywhere.

Unfortunately I’ll NEVER see the full pension from OMERS as I started too late and will never reach the magic number for full pension. Started at 41 so I need to work here until 65 minimum….

🤢

I can always go to another OMERS contributing company which would allow me to maintain my contributions and count toward retirement…but that’s a decision for future MP.

Interview went (I feel great), but still don’t think I’ll get it as my understanding is they have a candidate but need the smoke and mirrors of a ‘fair’ process. He’s a good guy so I’m happy for him if he gets it anyways.
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Hey, What role or job position were you applying at
 
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