Who's the best overall RRIF carrier? | RRSPs and RRIFs | Discussion forum

I went with Hubert as I liked their rates and payout flexibility for RIF's. A few only allowed RIF/GIC payments annually.

I see two disadvantages to Hubert - for me.

1. Located in another province. Potential problems for POA or estate, remembering that credit unions are governed by provincial laws.
However, this will not be a deal-breaker because I can't find a non-MB-CU that meets the other criteria.

2. Hubert is the only FI I know of which refuses to offer a one-year RIF GIC.

I have been working with converting, transferring, withdrawing, closing RSP/RIFs for a few years.
I find this awkward without a one-year GIC option. Most of it is laddered, but I do like the one-year GIC for withdrawal flexibility as it pays more than savings rate. There is always a float that needs to be reinvested for another year, although the amount varies.
Other people may want access to a one-year GIC for other reasons.
And for some it may not matter at al.

I use Hubert for other investments and am happy with them generally.

Other options:
A. Achieva. It seems to do everything needed, and there is no transfer-out fee. Rates are competitive although they have tended to be lower than Hubert in the past.

B. Accelerate. They allow a free additional withdrawal up to 20% of value of RIF. This would almost certainly cover my needs. I'm not sure if this can be done over multiple withdrawals. Transfers-out are $50.

C. Wait to see new offerings from motusbank (coming very soon), or Coast Capital when it rolls out federally.

I'm repeating some of these comments, but it's best to have them in this thread.

https://youtu.be/Y6P1KQaa9rk

Great video on setting up a RRIF - even I learned some things I didn't know, namely that:

• at age 90 (or was it 91?), the mandatory RRIF withdrawal tops out at 20% - wowsers!

; and,

• your executor can apply for a deferment of your RRIF balance to your named beneficiaries, assuming, I guess, those payments are transferred into another RRIF, an RRSP, or an RDSP;

Very interesting!

Peter, can you either enable iframes to let people embed YouTube videos (they don't auto-play) or, alternatively, if Simple:Press has that functionality directly or by installing a plugin, enable a feature to embed YouTube videos directly without actually needing to enter the iframe code?

Cheers,
Doug

Edit: Interesting! I guess pasting a YouTube URL automatically embeds it! Nice!

Doug said

at age 90 (or was it 91?), the mandatory RRIF withdrawal tops out at 20% - wowsers!

; and,

your executor can apply for a deferment of your RRIF balance to your named beneficiaries, assuming, I guess, those payments are transferred into another RRIF, an RRSP, or an RDSP;

  

As Loonie said, it is age 95 when the 20% kicks in. Actually a sound move because it helps reduce 'final T1 tax rate' upon death. Almost everyone still alive at age 95 is dead before 100. Actuarily, by age 93 or so, the probability of living one more year is only 50% so each year one survives past that age, one is beating the odds.

Tax deferred transfers of one's RRIF can only be with a spouse (successor annuitant or standard beneficiary), or a financially dependent child or grandchild in which the funds can go into a RDSP. There are no other tax deferred options.

Annuities were mentioned and that could be a good way to level out one's annual income starting at some age, e.g. 85 or so, but interest rates are so historically low now that annuity payouts are also historically low. Going to annuity depends a lot on one's belief on longevity, one's ability to continue to manage a RRIF, or one's trust in a POA to manage a RRIF. An annuity at that age is a solid 'sleep at night' factor.

These are not easy questions. Here are some of my thoughts.

Much depends , as AltaRed suggested, on how much capital and guaranteed income you have. The more you have, the more options you have that are realistic. That said, we all like to maximize income and most of us seem to want to maximize how much we can leave for heirs.

RE: OAS.
While it's true that the future is always a question mark, OAS may be more vulnerable than other aspects of the economy simply because it's a federal budget item, by no means guaranteed to be there for the rest of your life. I think it's almost inevitable that at some point in the next ten years, some government is going to revamp the whole system of income for seniors. This will include OAS, GIS, etc. This doesn't necessarily mean we'll lose it. The previous govt already fiddled with it by allowing deferrals and by projecting a later retirement date. Those who have deferred and are thus, by a certain standard, "entitled" to a higher return from OAS, may receive some protection/reward. However, deferrers are by far in the minority because most people can't afford to defer, so government may not care too much about that segment.

While CPP is not vulnerable in the same way, it is worth noting that it has already been seriously tampered with under the previous government - something that most people aren't aware of in terms of benefits. While most of us know that the premiums went up, most do not know that the Survivor benefits went down substantially. Some widows have been impoverished by this decision. Retirement income planner Daryl Diamond notes, in the second edition of his book Your Retirement Income Blueprint, that such a reduction is unprecedented.
I still have documents from CPP which promised that Survivor benefit would be 60% (allowing that the total could not exceed the maximum for an individual), but they have taken that away without announcing it. It's virtually impossible to find this documented and even harder to figure out how to apply it, but it's there in the gobbledygook of CPP legislation. Some people were grandfathered, and thus exempt from the change, but they had to have been born before a certain year in the 1930s, I think it was 1934 but not sure now.
If they can do this to CPP, which is contributory, be sure they can do much more to OAS which is not.

Whether or not you find the CPP decision ominous, OAS remains a budget item and subject to change. The people I know who have deferred CPP (not very many!) have tended not to defer OAS b for two reasons: they feel it is more vulnerable, and the deferral is not as valuable as the one for CPP. Perhaps also, they may need the money but have not told me.

Having said that, here is my rationale in support of deferring OAS, which will not be valid for everyone.
I work from the assumption that, as a retiree, my basic concern is to ensure that I have "enough" money at every stage of retirement, and to make that amount as bullet-proof as possible. What is "enough" will vary from person to person.
I would break it down into stages: before 65 (if retired early), 65 to 70, 70-75 or 80, and post-75 or 80. Each of these stages has different income levels/sources and different likely expenditures. The question of OAS deferral affects 65+.
From my point of view, if you have enough income in the years 65-70 without OAS, then why not defer it and take your chances with longevity etc.? It's a way of protecting your future years. I don't much care about trying to get my "share" before 70 on the theory that I might not live long enough to get it otherwise. If I'm dead, I won't care, but if I'm alive later, I will. Yes, it could affect capital available to a surviving spouse or to invest (may win or lose), so we need to look at the next phase. But remember that OAS for 65-70 is only about $36K total before any tax and clawback. Depending on your overall situation, this may not be a big potential sacrifice considering potential benefits later, remembering average life expectancy is now somewhere around 82.
The 70s is when spending starts to decrease, depending on when you get to the point where you are no longer keen on travel - this has been shown statistically, I think by StatsCan but can't remember for sure. The more I have from CPP and OAS, the more secure my basic income sources comprising "enough" will be, allowing that I may also have a work pension, RIF, etc., but also allowing that the income from these may not be guaranteed at the full rate of inflation, that inflation in my area may be higher than the national average (in Toronto, it is, and our property tax increases are based on local CPI, but none of our inflation-adjusted income sources are), and that I may need to pay for supplementary health insurance whose premiums go up faster than CPI (trust me, they do!)
The last phase usually kicks in between 75 and 85. This is when travel expenses cease but care expenses may go up in the final few years. Also, in the early 80s, you break even on OAS if you deferred it, and may actually gain as time goes on.

If you have enough income to sustain you at every stage, I think it makes sense to defer OAS.

Some will argue that increasing OAS later may deprive you of other income-tested benefits or increase the taxes you pay. It might. So what? My priority is simply having enough at every stage, not milking the system for things I could perfectly well pay for myself or leaving more money for someone else to spend. Some people are keen on taking as much as they can squeeze out of the system while also complaining about taxes and the size of government debt. I'm not one of them.

If you've read what I've written carefully, you will see arguments both for and against deferral. Ultimately, the decision will depend on personal circumstances, primarily assets and existing guaranteed income sources.

P.S. I just heard the Minister of Finance speak in the Budget about ensuring that all eligible Canadians are enrolled in CPP. I hope that doesn't mean forcing everyone to take it at 65 or messing with CPP "pension sharing". He probably just wants to ensure that everyone who can get it does and that they aren't taking money from GIS etc , which the government pays for directly, when they don't need to. It's a prudent decision, but we need to watch how it is administered.

Present value of tax saved, i.e. discounting taxes paid in the future, including end of life taxes, back to the present time.

YMMV = Your Mileage May Vary is another way of saying it is situational according to one's unique situation.