3 Tax Mistakes Everyone Makes At 55 & Regrets at 60

About this video

• Video Title: 3 Tax Mistakes Everyone Makes At 55 & Regrets at 60
• Channel: Trans Canada Wealth Management
• Speakers: None explicitly named
• Duration: 00:07:01

Overview

This video aims to inform Canadian retirees about three common tax mistakes that can lead to significant financial regret later in retirement. It explains how these "quiet tax traps" can be avoided by implementing smarter financial strategies, particularly in the late 50s and early 60s.

Key takeaways

• Mistake 1: No RRSP Withdrawal Strategy: Many couples, where one spouse is still working, fail to withdraw from their RRSPs during their low-income years (late 50s/early 60s). This is a missed opportunity to utilize lower tax brackets and can lead to higher taxes upon conversion to a RIFF and subsequent mandatory withdrawals, potentially impacting Old Age Security. It's also beneficial to transfer funds from RRSPs to TFSAs or non-registered accounts during these lower-income periods for more tax-efficient growth.
• Mistake 2: Unplanned CPP/OAS Timing: Deciding when to take Canada Pension Plan (CPP) and Old Age Security (OAS) is often treated as an independent decision, rather than part of a holistic retirement and tax plan. Blindly taking CPP at 60 without considering how it integrates with RRSP withdrawals, OAS timing, and potential clawbacks can lead to suboptimal outcomes.
• Mistake 3: TFSA Misuse: Using a Tax-Free Savings Account (TFSA) solely as a savings account, rather than for investment, is a significant missed opportunity. TFSAs offer tax-free growth, making them ideal for investments. The growth in a TFSA is never taxed, whereas RRSP growth is taxed upon withdrawal. TFSAs can be used strategically later in retirement when other income sources might be exhausted.