My RRSP in Canada Ends at Age 71 - Now What?

Did you know that when you turn 71 you can no longer contribute to your RRSP? And believe it or not, your RRSP actually has a timeline. On December 31st of the year you turn age 71, this would be the last day you can contribute to your RRSP. Now, when you reach age 71, you're going to have three options for your RRSP. The first one is you can withdraw everything. The second one is you can transfer to a registered retirement income fund, otherwise known as a rrif. And the third option is you can use your RRSP to purchase an annuity. Now, the topic of this video will be to talk about the options available to you when you have an RRSP and once you reach age 71. Hey, I'm Henry Wong, a charter accountant and authorized Infinite Banking practitioner in Canada. And I wanted to share that when it comes to your retirement, there are different ways that you can save for your retirement beyond the traditional vehicles you may be told about. And also there are ways you can use that money that you've saved for retirement. Now, I am going to talk about ways to do this. And this actually starts with taking control of the banking function in your life. After you finish watching this video, make sure you visit watchibc.com for a free 90 minute training on on that process of becoming your own banker so that you can take control of the banking function in your life instead of leaving it to others. This video isn't meant to bash any financial advisors, money managers, or the options that you have related to the rrsp at age 71. This video will be very helpful for you if you honestly want to know what happens with your rrsp at age 71. I am going to do a deep dive into each of these options and some of these discussions will shock you. So make sure you stick through the video so you can learn more. And I wanted to share this information with you so you can consider if it's a good fit for you and so you also know the roadmap of what lies ahead of you if you have an rrsp. Please recognize that this is not financial advice and please make sure you speak with a qualified financial professional who can properly assess your personal circumstances, especially at the time when you reach age 71. So let's dive into the first part of this discussion. So let's talk about the very first option when it comes to what to do with your RRSP when you reach age 71. Well, the first thing you can do, and it's generally least thought about, is you can withdraw everything that's in your rrsp. What's important to understand with this option is that it always exists and it's always available to you, even before you reach 71. Now, if you've built up a sizable RRSP balance, oftentimes you would be advised not to withdraw it all. So why would you not want to withdraw it all? Well, the answer may be obvious, but it's important for us to talk about it. The money, most specifically the income that you've earned and you've deposited into your RRSP was not taxed. So according to the cra, it makes sense to them that if you withdraw the money, you should get taxed for it. Especially since the purpose of the rrsp, the way that it was designed, was to save for your retirement. And so they put structures and rules in place to inhibit or at least put consequences to you when you withdraw. Now, if you've watched my RRSP video, you'll understand that the objective of the design of the RRSP was not to minimize taxes, or rather it was designed for you to save for your retirement with the assumption that you'll be in a lower income bracket in your non working years, like when you reach age 71. So you are ultimately deferring the taxes by avoiding to pay them now with the hopes of paying less taxes in the future. Now, in Canada we live and we have what's called a progressive tax system, which means that the more income you earn, the more taxes you'll end up paying. And depending on the amount that you have in your rrsp. And if you withdraw it all, the amount that you end up withdrawing will be added to your taxable income for that year. And when that happens, you will be moved into a higher income bracket, which therefore will attract higher tax rates. So Generally, if your RSP actually is above 300,000, you'll be placed in the higher tax bracket. Let's look at a few examples or illustrations to explain what I mean. Now, what you see in front of you is an income tax calculator. And you can simply find one of these on the Internet. And I recommend that you choose one from a reputable source. What's important to understand though, is that these tax calculators aren't meant to precisely calculate the taxes you would owe to the government, but rather it can be helpful for planning purposes for you to get an idea of the tax implications on the decisions you would make when it relates to your income. Just like this. So let's walk through an example following that. Assuming you're in Ontario and the Few examples I wanted to walk through and go through was when you are age 71 and you want to withdraw money, and let's use a couple of scenarios what you're doing, looking at what your RRSP balance is. So if we look at the RSP balance now, when you withdraw money out of your rrsp, it would be considered as other income. It's not actually, not in these particular categories. So the first thing that we'll go through is looking at these, this other income, which would be, let's use the example of $100,000.

So with the $100,000 in other income, what ends up actually happening is this is what the approximate amount of taxes you would pay if you decided to withdraw at all, the total taxes would be 24,205, which 15,840 goes to the federal tax and 8,364 gets paid to provincial tax. So total cash that you actually get is 75,795 for an average tax rate of 2420. So of the hundred thousand, you're paying about 24% in the amount of tax monies paid to the government. Now, following the example, if we were to use a higher number, if we had higher income in a higher tax bracket, since we're in a progressive tax system, let's see what that impact would look like. So if we take a look at this example here, now we look at the income tax of what we would end up paying under this example. So under this example of the 300,000, the total taxes you would pay is 122, 750. And so 75,000 goes to the federal, 46 goes to the provincial. So you actually get left with 177 to 50 after you withdraw the income taxes. So now you can see the tax rate has increased significantly to 40.92. So let's just kind of recap. 300,000 go is what's in your portfolio. And you withdrew it all after you've withdrawn it all, 122,000, 7, 50. In other words, 40, almost 41% of it goes to taxes. And then the rest of it comes out. So you can see a big portion of that goes to taxes. Now let's use a final example where you actually have a $1 million portfolio.

Again, because we're in a progressive tax system, what's really important to understand is when you look at the money that you have in your rrsp, you actually need to look at it after taxes, not the gross amount. So even though your account can say you have $1 million. If you withdrew it all immediately, what you would have is really paying 497,000 related to taxes. 502. So pretty much 50, 50 goes to the government in terms of taxes. And this is by design in the structure of these registered plans for, for an rrsp when it comes to the rrsp, because you were not paying tax before, but now when you withdraw it all, you would have to pay taxes on it. And it's much more penalizing if you withdrew it all at once because all of that gets added into your income and that pushes you up to a higher income tax bracket and therefore you would pay higher taxes, therefore you get less left behind. So clearly you can see why, if you saved a lot of money in your rrsp, this option of withdrawing at all is probably something you don't want to consider just purely on the amount of taxes you would pay immediately. So let's talk about the next option that is available for you. When we look at the second option you have, that option is actually transferring the balance of your RRSP to a registered Retirement income Fund, otherwise known as a rrif. When we look at the context of the situation, the RIF is really a continuation of the rrsp, except there are some very important changes in the features of the rrif. Now, a Registered Retirement Income Fund is an arrangement between you and a carrier, like an insurance company, a trust or a bank that the CRA registers. You transfer the property to your RRIF carrier from an RSP and the carrier is the one that makes the payments to you. Let's look at the RRIF and look at who controls it. Well, it's similar to an rrsp. The Canadian government works in collaboration with the carriers mentioned, like the Canadian banks. And the name registered means that these accounts are held with Canadian financial institutions and are registered with the Canadian government and overseen by the Canada Revenue Agency, otherwise known as the cra, which means they have visibility to your profile and what you have in your account. This means that the CRA also sets the rules governing the limits, the timing, what's allowed and what's disallowed. They control the rules, not you. So when it comes to planning for your retirement, it's important to understand that they can change, add, remove rules where they deem that it's appropriate. You are also using their plan, so that is why they control the rules. Now, there is something really important to understand. When it comes to the rrif, there is a minimum amount that must be paid to you or withdrawn from your RRIF every year. Following the year the RRIF is entered into, for example, age 72, the earnings that have grown in your RRIF are tax free, and the amounts paid out of your RRIF are taxable when you receive it. So you can have more than one rrif. And you can also have what's called a self directed rrif. The rules that apply to a self directed RIF are generally the same as those for an rsp. Now let's look at it from a more practical standpoint. Depending on how you are physically, mentally and emotionally by age 71, by this stage of life, most Canadians this is probably the last thing you want to think about when it comes to living. Let's dissect the details of a rifle so that you can see what that would look like. Now, the first part we're going to talk about the RIF is about the money that goes into it, known as contributions. And this is one of the big changes that happens between a RIF from an rsp. It's relatively simple. Once you convert the RSP to a rif, you are no longer able to add money into into the riff. This means that if you want to take advantage of the large pool of money that you've built and the compounding growth that comes from it that you've built up, the structure of the riff now no longer allows you to add money into it to grow the compounding that you've had in your money. So now that you've converted your RSP into a riff, you're able to put it to work. And in a RIF account, you're still able to have the option of being a self directed or an institutional directed option where you hold cash, GICs, stocks, ETFs, bonds, mutual funds, segregated funds. And it's important for you just to really see the options that you have available now. The rif, in terms of the feature of holding these financial assets, is essentially like a house, just like the rsp. Since you can no longer add to the balance from your earned income like the rsp, the most common ways your RIF balance can grow now comes from only three income sources. The first one being interest, the second being dividends, and the third being capital gains. So similar to the rsp, the compounded growth in the risk is completely tax free. And at this point, I definitely recommend that you watch my video on income taxes and rrsp. You'll learn that the trade offs to you are actually quite large. In those videos, I explained that different income sources attract different tax rates. And when your money is in the RRSP or the RRIF. The trade off that you are giving up is the favorable tax rates from putting it inside the RRSP compared to when your money or the income that you have generated was outside of the RRSP or the rrif. I'll show another example of this when we talk about that RRIF withdrawal section because the money that you are withdrawing now has been compounded and grown tax free. But ultimately you need to take that money out and that's going to incur taxable consequences. So please make sure you stick through the rest of the video to see that spot. While you most certainly have the choice of having your account, your rif, be a self directed one where you are managing the assets in that account no different than your rrsp. I just want you to really think about the practicality and the reality of the situation. You're 71 and you probably have worked more than 50 years now and I'm sure you really want to just enjoy the rest of your remaining years that you have on this planet. And the last thing you want to think about, or at least the stresses that go through with you, is managing your portfolio. But I think it's still important we talk about the road and the options that lie ahead of you when it comes to your rrif. So let's kind of look at when you've accumulated the amount in your rrsp. You've probably weathered some pretty big storms when it comes to saving for your retirement in an rsp, whether it has been a pandemic or a financial recession. During those times you likely have experienced shocks to your portfolio and it was quite gut wrenching during the time seeing your portfolio values go down significantly and as harnesses. This was for you. If there were any losses, you were able to make it up by contributing and saving more to your rrsp. The reason why I just wanted to share and highlight the importance of the feature of the RIF with it stopping your ability to contribute to it. Let's say that portfolio that you had was a money making machine and you wanted to capitalize on that growing income because you had a larger pool of money. Well, that has now stopped. But the other part I now want to talk about is what you're actually holding in your portfolio or your riff. It's really important to highlight. It doesn't matter if it's an RSP or a riff, it's all dependent on the assets or the financial assets that you're holding in your portfolio. So now since this video the topic of this video is about a Riff, you could still possibly hold stocks or equities as an example. And when you do that, you could still, you are exposing yourself to the volatility or the temperament of the financial stock market. And so imagine you are faced with another down year now that you are holding your rift, meaning you're after you're in your age 71 and you've lost 30% of your portfolio value, well, you're now stuck because you can't contribute more into building that portfolio. The second thing is, you could say is, well, at that stage of my life, I'm going to eliminate the volatility of the stock market to put my money into some form that has capital preservation and gives me some form of interest. In this thought process, you're actually exposed to inflation. And when it comes to inflation, the topic of inflation is much more complex. And I really encourage you to take a look at some of our other videos in this channel related to inflation. You may relate to inflation as seeing prices of goods and services increasing. And so when people see those prices of goods and services increasing, they just call that inflation. But I think it's really important to understand what, what actually can drive or what drives the inflation. And this is again most certainly true. When you look at the rising prices, it's really just a byproduct because when we look at what we transact with the medium of exchange we use is taking money and transacting or converting it into those goods and services, you're trading your money for those products or services. So assuming you choose the course of putting money in some form that pays interest, like bonds, you're still exposed to fluctuations. And this time it's much more invisible. You're exposed to what's called increases in the quantity of supply and the temperament of the central bank and the government. When it comes to printing money, when we look at our economy, we've got to look at it from the perspective of supply and demand. And when we look at supply and demand, we look at it from goods and we also look at money. So assuming the production of goods and services in the economy stays the same or goes down, if there's an increase in the money supply from the central banks, printing money, this means that there is more money in the economy chasing fewer goods. And so you will feel this because you need more money, hence the higher prices. When it comes to buying something, you're going to see the prices of that good or service go up. Because if there's more money in the economy, it needs more money. The value of that money has gone down. So you need more money to purchase that same good or service. If we also look at human behavior in the relationship with, with money, if the producer of the goods or service are exchanging it for money, right, they're in the business of selling that product or service. They're going to sell it to the individual who's willing to pay a higher price for it. Why would they pay a lower price or why would they get less money for something when they can charge more for it? When there's more money in the economy, people will have more money in their hands and they're going to be more willing to spend that money to get that good or service if they actually really need it.

So when it comes to money and the quantity of money that's in the economy, it means that the value of it goes down. When it comes to there being an abundance of money in the economy, if some people need money, if there's such an abundance to it, it's very easy for them to access it and get it. And when it's easy to access and get it, that means that the people who is supplying the money can't charge a lot for that money in the form of interest. And so that's why interest rates go down. And if interest rates go down, that means when you want to store the money in a place that pays interest, like capital preservation type financial assets like bonds, the yield or what you're going to receive in interest and payment is actually going to be much lower because there's no incentive, the interest rate is going to be much lower. So then you're going to get paid less. You're also going to get paid less for that money that you have left in bonds and yields. So if we look at money and you moving your money into bonds or something that has capital preservation, if there is a huge quantity in terms of the supply of money and, and the interest rates are low, it means that you also need to spend more money, take more money to convert it to those goods and services. And that is why you are faced with inflation. So you essentially are not only getting paid when you put it in those financial assets, you are essentially getting less in terms of an income because interest rates are low. But also when you need to use the money, like when you withdraw it now, not only are you going to pay taxes on the withdrawal, but you're also going to be faced with the higher prices in the goods that you end up purchasing. Okay, so the first thing that you're seeing here is Canada's money supply or M0. And what M0 means is the total amount of money that is easily, that is very liquid in the market. It can include coins and other circulation, you know, money that's essentially floating around in the economy. And what's really important to understand is the amount of money. And this is a life to date chart based on when data has been available. And so from let's say 1963 all the way to current today, the money supply has been, let's just kind of call it really simple, 100,000 here, 100,000 million. And since the pandemic or the recession, since the government has, with the central bank, has printed money, the supply of money has increased from 100,000 to 500,000. 500,000 million. And so if we look at that, that has peaked, it essentially went up five times what it was. So when money, the quantity of money has increased five times now, you can see it has come down. So let me just kind of look at the last five years of our chart.

So if we look at the last five years, from 2020, again, pandemic, all the way to beginning of 2021, and now it's kind of come back down to 400,000. So the money supply has increased from just two years, almost four to five times of that money. And so if there's four to five times, in terms of the quantity of money that is existing in the economy, that means people have more money to spend and use. And when they have more money to spend and use, they're going to place it in various places, whether they spend it, whether they invest it. And so that is. But if the production of goods and services are not, are not increasing in line with the amount of the quantity of money that's in place, this creates a problem because the goods and services that are available in the economy has either gone down, either stayed the same or gone down or. But the quantity of money has gone up. So then more people have more money and they're going to compete. So now let's look at the inflation rate and what you see.

So the first chart I want to share with is looking at the core inflation rate. And if we kind of look at historically, back before 1988, the inflation rate was within the 4 to 5, almost 6% and then within a long period of time, so over 30 years since then, 2018 or so somewhere here, 2018, the inflation rate was hovering around the 2%. So that's what most of you have been used to seeing. And now suddenly, again, because of what's been happening in terms of the shortage of goods and supplies. And this can. This could have been happening because of government lockdowns, which stopped many businesses from actually operating. And that has then also impacted and hindered production. And with that production hindered, that means there's less supply of goods available. And if there's less supply of goods available, that means more people who have more money from what we just saw from M0, are needing to chase after those goods and supplies. That's going to put a lot of upward pressure on the prices of those goods. And we can actually see that now where the most recent January 2022 inflation rose to 4.3%. So we're very close to reaching back in the 1988ish time prior to that and seeing the inflation rates get there. So the key takeaway from what you've just watched here is that if you put money into capital preservation assets in your account, it obviously isn't going down, but your money is actually losing purchasing power because there's more money which is available, which makes the money that you have less valuable. But if the goods have increased in price because there's a shortage of it, more people have more money and they're chasing it. This putting upward pressure on the demand for goods, that makes things very, very difficult for you when you are retiring. And let's kind of put it in a different way. Let's say the interest rates today are 0.25%. And if the cost of goods and services that you're paying for, you saw the core inflation rate in January 2022 was 4.3%. If we subtract that, you're actually losing by putting money in the interest rates, you're actually losing 4.05% in your portfolio in terms of purchasing power because prices are rising against what you have. In a sense, your money's losing value without you even knowing. And this is all completely happening under your nose because the balances held in your account are by the financial institutions are only tracking the amount of money that you actually have. So it doesn't. It'll show whether it increases and decreases, but it doesn't show whether or not the value in terms of what you are able to use it for is increasing or decreasing. And the last point I want to talk about from, you know, putting money in your stock in the stock market, putting money into interest vehicles, interest earning or capital preservation assets. The last point I want to talk about is fees. Practically speaking, when you get to age 71, you probably don't want to Think about managing your money anymore. And self directed is generally not very popular for many people at that age. And I think you can understand why. You just want to know how much money you have so you can live off of it. So one of the courses of actions you may look, look at is handing your money off to an advisor. And whether you manage your money yourself or you put it with an advisor, if it's put into funds like an etf, a mutual fund, segregated funds, you'll still be paying a management expense ratio of that fund. And it's irrespective of either that money goes up or if that money goes down. The second option you can also choose to do is if you opt to not manage the money by yourself, you want to hand it to someone to manage, you'll likely pay advisor fees. And the most common form of compensation when it comes to advisor fees is the assets under management. And these asset management under management fees can be around 2%. And if you think of the stage that you are in in your life, if you move your money into capital preservation, meaning the value of it doesn't go down from the account standp, that these fees also erode against your investment. So irrespective of whether your money increases or decreases under their management, you're still going to pay them. And if you're putting money into something that is gaining 0.25% of interest and you are paying 2% in management fee, you are, you're not even earning enough in your portfolio to pay the fees for them to manage. Now philosophically, if we look at whether your money goes up or goes down, you are entrusting them to manage your portfolio and they're going to advise you to put into capital preservation vehicles. And if we look at the capital preservation vehicles, like I mentioned, if they're paying 0.25% compared to their management fee, not even just the fund fee, the management expense ratio fee, but also the advisor fee. If we look at it in that perspective, you're not actually making money. So we kind of have to look at it philosophically when, philosophically, when it comes to the goals of what you hired somebody for, for your money was to have it grow and also protect it and not have it go down. But when the money that you've entrusted with them goes down and you still need to pay them, it kind of begs the question, why am I paying them to manage my money? What are they managing? If my money is going down and I still have to pay them, they're not. If we kind of look at the compensation structure. The compensation essentially is not aligned with the risks that you have to carry. So if we take these three factors into context, the volatility of stock market inflation and fees, you're the one who takes the risk of building, managing and living off of your riff. So the perspective and what I wanted to share with you is again another hypothetical scenario. But I think it's important to see just visually what that entails to know how much you're actually paying when it comes to holding the assets and the fees that incorporate with it. Obviously it doesn't represent real life because real life is much more dynamic. But I think it's still important to kind of understand visually how the impacts of these decisions that you're making. So let's look at an example that you see here. So the first example that you'll see is if you put a money in a fund and let's use a hypothetical portfolio of $1 million.

Let'S say the stock market, sorry, the return under these categories, whether it is a fund or a capital preserving tool like a GIC, that return here as an example would be 20%. And if it was, the same return for a capital preserving vehicle like a GIC would be 2%. And what's really important to highlight in terms of a GIC is you've also got to put in consideration the amount that needs to be locked in for you to get it. If it's more cashable in the immediate term, you're, you're looking at interest rates of even 0.75%. So it actually becomes very, very little. So there's, there's got to be a strategy in place to know which portions or how much or what liquidity you actually need. So you're, you're kind of constrained on that. When you're using some vehicles like this. I'm using 4.3% interest. This is based on January 2022.

Okay. And then we're going to talk about fees and we talk about if you're putting money in a fund, you're going to pay an approximate management expense ratio of 2% and you're going to pay an advisor of 2%. So if you have an advisor who also puts money into these funds, you're actually paying close to 4% of fees. So if we look at, under this example where we're taking the total, if we're adding up all these percentages, the net percentage that you get from the return and inflation is 11.7%. And if we're looking at the return net of the GIC and it'll be minus 3.55%. Now some people, again you may hire or make make the decision to put money into having an advisor manager and they could still charge you a 2% management fee. And again, that would then obviously increase the cost. So let's look at what those values would look like. So if we take the portfolio values, times the interest, the earning rate here.

Then the profit and loss on this example would be 117,000 with an ending portfolio of, you know, 1,117,000. Now if we did the exact same thing for the gic, you can follow the same example through and it'd be 944, 500. Your money is actually losing value because of that inflation held in such financial asset. Now what if the portfolio goes down 30%? You end up paying not only the loss in the portfolio.

You'Re still paying for the inflation, but you're still paying the advisor and the MER fees and essentially you're losing actually 38.30%. So when you look at your statements, you may see the return, but you don't actually see the rest of these other items.

So for most statements, if you actually pull up your statement, you're going to see whatever this return is, it can be 10%, it can be negative 30%. But what you may also not always see or get that doesn't get incorporated into the return is the MER and the advisor fee. So ultimately your actual cost in to doing this is 38.30%. And so you would have lost 383,000 and have 617,000 remaining in your portfolio. And again, this, this is not easy to live with and imagine adding this extra stress to you at this stage of life. So the key takeaway of me explaining all of this for you to understand is for you to recognize this is what the future journey of what your RRSP is going to look like. And the earlier that you have in terms of setting up these pieces together, the better you can avoid these types of traps that is going to end up happening. And so this is where, if you really want to learn more about this concept and this is where at Ascending Financial, we really encourage you to take control of, of the banking function in your life because this is one of these features where imagine putting the same amount of money that you are retiring on into your own banking system, where the money actually grows uninterrupted and it actually grows compounded when and when you need to use the money, you're actually not going to interrupt the compounding and the growth of your money. And if you really want to learn more about this concept, make sure you visit watchibc.com after this video, of course, to learn more about this. And again, it's a 90 minute training to really understand the anatomy of the banking system.

So now that you have money put into your rrif, and you know how the consequences of what can happen with the money that is in your rrif, let's talk about the next steps, which is when you need to use your money and withdraw the money out of your rrif, what are the consequences when it comes to that? When it comes to withdrawing money out of your rrif, the devil in this case is certainly in the details. And assuming you convert your rrsp at age 71, and also assuming while you're watching this video, there have been no changes to the 2015 federal budget minimums, you're going to be forced to withdraw a minimum amount out of your rrif. And this amount can be shown on this table. When you look at this table that you have here, the first and the most important thing is what, how to interpret this table. You can find these tables in the, at the CRA or any government web in the government websites. But the key part to take away from this is that at these particular ages that you see here, based on the value of your portfolio, you would have to withdraw this percentage from the value of your portfolio. So at age 71, withdraw a 5.28% from it. And if you are age 95, you need to withdraw 20% from it. And these are stipulated in the rules related to a rif. And so if you waited to the very end of when you actually reach age 71, well, by age 72. So the year that you turn 72 is when you actually will need to make your very first withdrawal. And what you may have noticed is when you were looking at that table, well, that table shows these withdrawal rates aggressively increasing over each year. Now, while you can most certainly withdraw more than the minimum, we've established that since you can no longer contribute to the rif, let's go back to the originating source of the rrif. The originating source of the RRIF was coming from your rrsp, which when you first made your contributions into the rsp, there were no taxes deducted from that income. Well, ultimately now it's become a rif. Since you've transferred it from an rrsp, the government ultimately wants to tax you back for the money that you have not been taxed for putting in. So this is what is known as a deferred plan. The taxes that you have been, you were not paying, you ultimately have deferred until now. Now, let's talk about the consequences when it relates to your withdrawal. Well, the first and not so obvious when it comes to withdrawing money out of your rrif, especially in the overall scheme of the amount of money that you've built up in the rrif, is that you've interrupted the compounding of your money. Here's an example. If you had $1 million built up in your RRIF and normally you actually earn a annual return of 5%, well, in this example, you would receive $50,000. Well, let's just say of that 1 million, you withdrew 100,000 and now you have 900,000. We're assuming you earn that same 5% in this particular example on 900,000, receiving 5% of a return, the same return just now on a lower base, your income would be 45,000 on what you would have earned instead of the 50,000. So ultimately, you've lost 5,000 in growth because of that withdrawal. And this is what interrupting the compounding of your growth means. Even though you are the one who saved the money into your RRSP and you chose the option to convert it to a riff, you're also not in control in how you need to get the money out. More specifically, more in a more extreme way, if you decided not to withdraw money out of your rrif, you actually don't get a choice in this matter. This is what the RIF does. This is what the structure of the RIF is. So what's surprising you may be, why would I ever not want to withdraw money out of my RRIF? Well, for most Canadians, by age 71, you'd be entitled to receive old age security. And what's important to understand in terms of old age security is it's a government entitlement that you receive and you are supposed to receive. And the issue is in terms of the old age security, how it's determined though when your income is too high, what the government is going to do if is start clawing back some of the old age security as a tax recovery. And even though you've worked hard sacrificing and saving money for retirement, which you've put into your RRSP and now you've converted it to a rrif, and when you've converted it to your rrif, you are now mandated on how much money you are supposed to withdraw according to the schedule that I shared with you. And when you withdraw that money from according to that schedule, you are going to be paying taxes on that amount on that withdrawal. Not only are you going to be paying taxes on that as income, if the amount is too high or the portfolio that you've built is too high and the mandated percentage that you need to withdraw becomes too high for you, especially in the later years, this is going to now impact the amount of old age security you are actually normally receiving because you, because of the adjusted because of the withdrawal factor. So what you need to take into consideration when it comes to planning for your retirement and the amount of money that you're going to withdraw is actually looking at your old age security and whether or not your income that you need to live off of is going to be impacted. So how old age security works in terms of this clawback is the government is going to look at your annual net world income from all your sources and if it exceeds 79,005,4 which is in 2020 Canadian dollars, the amount that exceeds the 79,054-the government would charge a recovery tax of 15%. So by the time your income exceeds 128,149, this recovery tax will effectively eliminate all of the old age security benefit. Or said in another way, the cash flow you are entitled to receive and this is all because you earned too much income, it all gets clawed back to the government. You see, the greatest restriction you'll face with a RIF is is ultimately getting your money back out after you've put it in. So let's walk through a very simple example. You declared $100,000 in income in the year. And since that $100,000 is more than the 79,005 4 the excess of 20,000 9, 46. So the amount more than the 79,500 is going to be calculated by the government at 15%. So the government will then claw back 3,141 90 of your old age security benefit. So you're actually not going to get the maximum. Now let's assume the maximum OAS you can receive in today's dollars is $642 per month and this translates to 7,707 annually. So on this example, in comparison to the 7,007 with the clawback of 3,000, they would clear this clawback is almost half of your oas. So this is what's really important to take into consideration when it comes to your withdrawal. The second point I want to establish is the withholding taxes. When it comes to a rrif, the financial institutions which hold your RRIF will not subtract withholding taxes for the amounts up to the minimum of your withdrawal. So on that withdrawal table, if all you are doing is withdrawing the minimum, the financial institution will not withhold any tax from you. However, amounts above the minimum will still be subject to the withholding tax rules. And if you need a refresher of those withholding tax rules, this is where I would recommend that that you take a look at watching my video on the RRSP and the withdrawals in the RSP where I talk about the implications of taxes that you would pay. Now, the rules are different in Quebec, but what's really important to understand is you could possibly deal with timing of taxes because of the withdrawal. Taxes may be larger than what you are, what you should actually be taxed at. When it comes to the stage that when you are converting that RIF to the rsp, what you want to understand is a very important tip to understand when you're converting your RRSP to a RRIF is that on the conversion form, it's going to ask you whether you are basing your RRIF minimums on your age or your spouse or common law partner's age. As we saw earlier, the minimum withdrawal rate on the RRIF becomes increasingly more aggressive. And so if you base it on your younger partner's age, then you can minimize the minimal annual withdrawal amount, therefore delaying the pace of the drawdown of your portfolio with the lower taxable income. Thus, it's going to attract lower tax rates. So this is quite beneficial for you if there is an age gap of more than five or ten years for you. So let's put all of this together and let's walk through an example of what the withdrawal schedule will look like with numbers. So let's use a hypothetical example here where someone has built a $1 million portfolio of almost.

A little bit more than a million dollars. And let's assume this particular individual is a male and the average, you know, life expectancy for that male is age 85. And so on that 1 million portfolio, we're also going to assume the individual is putting money into a high principal protection. Therefore, in today's economic environment, it's not very high in terms of what that return is. So it'll be about 2%. So now let's look at the first withdrawal requirement. So the first part is on the balance, the withdrawal, the investment is going to get a return of 2%. And then afterwards from that, it's going to then apply the 5.28% withdrawal factor on the balance which creates this is the annual withdrawal that needs to come out. And once that comes out, the ending balance in the portfolio is 971. So now if we follow that through to the second year, the same concept now the rift factor rate is 5.4% on the 971,000 with the return of that 19,000. So that new withdrawal rate amount is going to be 52,445. So the new ending balance on the portfolio after all of that has happened is 938, 191. So a couple of things that I will kind of recap in terms of our discussion earlier, which is first, the interruption of the compounding.

The first is the interruption of the compounding, since you can see now, since the balance is much lower, initially the return was 20,008. 3. Because now the pool of money is less than before. The return is now 19,424, even though the rate of return is still the same. So you've interrupt the compound and you lost it. You, you lost some of the money when you are withdrawing money or winding down the portfolio of money that you have. So let's carry the whole example through all the way to the end following that assumption. So again, each of the rates in terms of the RIF gets much more aggressively as you age. And you may seem like, and you may say this is quite normal because you need to get the money out as you get older. Again, these are where the consequences could be a factor that you have to be very careful of when you're looking at your retirement stage. So if we kind of follow it through, following all of that, in terms of the amount of money that has been withdrawn, the total amount of money that has been withdrawn is about 736,992. And the ending balance of what's left. So again, this male passes away at age 45, sorry, 85. And the ending balance is now almost $500,000. So the individual has been able to get quite a bit of money out. And this is all because of the compounding, sorry, the growth of the investment during inside the rif. But you can also see that the return has actually been going down. And this is natural because the base or the pool pool that the money is being withdrawn from is gradually decreasing because of the withdrawal. So the compounding ultimately is getting interrupted by this withdrawal plan that is mandatory. So let's follow the same example through. And the first source of income that's coming into this individual is going to be coming from the withdrawal so at age 71, because of the mandatory withdrawal is going to be 53,019. And let's just assume CPP and OAS and other income is 20,000. So in total, this individual will receive as taxable income 73,001,9. And if we apply general tax rates to that, this individual will then pay 18,000 in taxes. So what they're left with is a net cash flow of 54,764. And if we follow the same concept for age 72, the person on this annual income cash flow is going to receive 54,334. So if we extend this example all the way to the age of death. So if we look at the cumulative results of the table, I know it's a lot of information, but if this person lives till 85, that what's left in the RIF is going to be the 498, 375, and that is what's going to be left to the estate. And let's assume here that it's not transferred any further. It is now going to be taxed by the cra. So let's take a look at the summary of these results. So if we look at that withdrawal plan, the total amount of cash that is coming from the rrif is this 736,922. And we also are going to use that CPP and OAS and other income of 300,000. And that combined income is going to attract a total amount of taxes paid of 259,230. So the net benefit out of doing all this while living is 777,691. Now remember, what was left was the 498. And if we go through putting it into the calculator and let's just approximate it to be 50%. So 50% of that is paid to taxes. So the net benefit that's left to the estate is going to be 249,182. So if we look at it, the total portfolio that started at 1004148 withdrawn about 736. And what's left behind is 498. And then we look at the amount of government benefits that you've gotten out of it, you would pay 508, 413 in taxes. And even from the CPP that you would get from them and OAS that you've contributed, you would get 300,000 and which is less than the government in taxes that you would pay. So ultimately, under this approach here we can actually kind of dissect a couple of things. The taxes that you're paying on your portfolio eventually ends up being half of the amount. No matter how you withdrawn it out, what you are left behind, the amount of taxes that you have to pay is quite high, which is 50%, the amount of benefits that you've contributed to your lifetime for cpp. And then what you would receive from OAS is not even enough to cover the government taxes. So you have to now wonder, under this roadmap that you have been typically been accustomed to investing into putting your money into an RRSP and putting your money, then converting it into a rrif, does this plan even make sense to you when it comes to the overall outcomes? Yes, you get 736,000 in terms of the withdrawal, but your taxes are quite high in terms of the balance of 508,412. Again, this at your stage of life, when you get to that age, you may not care about that anymore. But when you get the chance to plan around this scenario, this is one of the things you you want to look at. So this is why this kind of leads to a good segue of understanding what happens to your riff at death and why I've calculated that 50% on the 498. Let's move on to the death portion. There are very few guarantees and certainties in life, and one of those is death. As morbid as this sounds, death is going to happen to you. The only question is when. And on death, just like the RRSPs, the RIF is deemed to have collapsed and the tax consequences really depend on who is listed as the beneficiary to your rrif. And the general rule for a RIF is that the value of the RIF at the date of death is included in the income of the deceased for the tax return of that year. There are three exceptions to this rule where the tax can be deferred if the beneficiary of the RRIF is one of the three parties. The first one is the spouse and it includes a common law partner. The second is a financially dependent child or grandchild under the age of 18. And the third is a financially dependent mentally or physically infirm child or grandchild of any age. Now, what may come as a surprise to you is that the CRA is already a beneficiary to the value that you've accumulated in your rrif, just as it was for your rrsp. The only question is how much. If we think of the original premise of why you're putting money into your RRSP which now has converted to a rrif. Generally the intention of that was to lower the income tax bracket that you've been in and save that money into retirement because you get to deduct the amount of contribution from deduct the taxes from the contribution that you have. Again, please watch the RRSP video where I go through a little bit more details about this contribution. But if we go back to this original concept of well, if you've accumulated a large value into your rrsp, this can pose a very big tax liability that can come from when you pass away and you don't meet those three exceptions. Now let's walk through a few examples and when it comes to matters around death, I really encourage you to seek professional guidance. Tax and estate planning is very, very complex and it's a personal issue and it's not something that you can easily find online and do it yourself. While you most certainly can do it yourself. When it comes to designing the solution that best fits your unique needs, it's important that you speak with qualified professionals. It's going to cost you for this professional advice, but the mistakes that you could make could cost you, your state and your heirs a whole lot more if you get it wrong. So you've got to balance the amount of money that it would cost for the prevention for the professional advice compared to what mistakes you could make. You don't want to be in a situation where you are penny wise but pound foolish. Let's dive into the example. So very similar. I am using an income tax calculator and one of the important things I just will say is let's look at if you've built up a RIF balance and when you've passed away you have now let's say 100,000 remaining in your rifle. So the amount of taxes you're going to pay on this specific circumstance, if your rrif balance is 100,000, you're going to end up paying 24,205 again assuming the three exceptions are not applied. Now if we go through the same example of let's use another example of if your rrif balance was 300,000 then you would end up paying 122,000 in taxes or what's remaining of 177,250 or the equivalent of 41% that would be paid to the government as deemed to have collapsed or disposed of. Now let's use another example of 1 million. So if you used 1 million, if we used 1 million, the total taxes you would pay would be 497,457. Where the after tax income or that would be paid to your state would be 502,543. Now I'm not sure if as you can see now this is about 50%. So you can very closely conclude that the value of your RRIF when you pass away.

Will be taxed by the government. The amount that is taxed is dependent on the size of what's left behind. And if it's more than 300,000 that then you're at least paying anywhere from 40% taxes. And if you are looking at the 1 million balance, you could be paying 50% taxes. So if we go back to the original premise that you are saving money for retirement and a way to encourage and the design of the RRSP which is converted to a RIF was to incentivize you to save money for retirement and to take some of your income and not pay taxes on that on the deposit of the money into your rrsp. But assuming you've compounded and grown the RRSP balance and then you've converted to a RRIF and it's still growing, that money has been growing on non compounded. And like I mentioned before, that money was also depending on the income type. You have been giving up tax advantage rates for growing that money. Now you've built up that portfolio and you have been making your withdrawals included to that. Not only are you paying taxes on the withdrawal, but at some point you don't know when you are going to die. So the odds are also not in your favor. When you pass away, you're going to leave behind a large tax bill which essentially will be settled by your remaining RIF balance. And if your balance is greater than that 300,000, you would end up paying up to 50% taxes on the balance that is in your account. So if you have a million dollars sitting in your RIF at the at the point of your death, the cra has already 50% of that as future revenue for the CRA. 50% of that is their revenue. And so if you think about the original premise of you depositing money to save the amount of taxes you would pay, you could eventually still pay more taxes from your eventual death when you leave behind a large balance. So that whole strategy of paying less taxes now, you are actually deferring the taxes to later. And when you defer it to later, you could actually create a bigger time bomb of the amount of taxes that you would ultimately need to pay to the cra. So when it comes to the original plan of saving taxes for retirement and you would be in a lower income bracket, so you would incur less taxes when you were withdrawing money out of your retirement plan, this really leaves a huge exposure to you when it comes to when you potentially pass away. You could actually pay more taxes than the amount of taxes you saved when you put your money into your RRSP or rif. The last and final option you have with your rrsp at age 71 is to purchase an annuity. And for most people, transferring your RRSP to a registered annuity. Well, what is an annuity? Well, an annuity is a sum of money that would be payable at regular intervals, outlined in a contract or agreement. Just like transferring it to a rrif, if it's set up properly, the value in your rrsp, just like transferring it to a rrif, if set up properly, the value in your RRSP can be transferred to a registered annuity tax free. It's important to understand that registered means that it is under the same control and observations of the government. And the RRIF is structured essentially very similar to a registered annuity where you will receive a guaranteed income for a specified period. Now, financial advisors will tend to recommend RIFs over annuities because they receive an ongoing stream of income for overseeing your RRIF instead of a one time commission for selling you an annuity. Now, there's a possibility that some people do convert some of their RRSPs with a combination of a RIF and an annuity, but I'm not going to go into too much detail into this. This is more of a personal thing that you have to take a look at your goals and objectives. But on the amount withdrawal, the amount you receive from your annuity will still be included in your taxable income to be taxed. Now, one of the most useful attributes of an annuity is its capacity to address longevity risk, which is the risk that you will outlive your money. This is a real concern for retirees, given that Canadian life expectancies are long and continue to rise. At age 65, the average life expectancy according to Statistics Canada is around 87 years for women and 84 years for men. Centenarians are the fastest growing population in Canada and a life annuity helps simplify your life, giving you peace of mind. There are no further decisions to make and your income will arrive regularly for for as long as you live. Even so, though, most retirees or some retirees balk at buying a annuity because the income received per dollar paid seems too low and especially because of today's interest rates. So instead they set up RIFs, manage their retirements and money themselves. If you're choosing between a rifle and a annuity, there are two main reasons why an annuity may be better than a rif. While some equity investments are likely to be necessary to generate income for a RIF in this low interest rate world. And again, this is what we talked about when we went through the rif. And with equities, there are normally no guarantees regarding rates of return or preservation of capital. You get to worry about making the right investment decisions, whether the stock market volatility will ruin your retirement plans and whether you'll run out of money before you die. You may continue to be confident in your ability to manage your retirement funds, but, you know, generally, research says, like I mentioned in the riff, suggests that the risk of making a bad financial decision actually increases with age. So annuities do have some shortcomings. In contrast, when we look at comparing annuities, they do have some shortcomings. A basic annuity provides no inflation protection. And for a substantial reduction in the annuity payment, the financial institutions can offer an indexing feature which increases payments annually by a chosen percentage of up to 4%. For registered annuities, another very big important disadvantage that you may not be aware about is that when it comes to a basic annuity, it ends at the end of the individual's death. So it leaves no money behind for heirs. You're essentially trading, you're essentially exchanging that security of annual income that you would receive at the compromise of leaving anything behind. So this is one of those factors you want to consider when you look at whether or not an annuity is a property mix in your retirement strategy. And this can be partially countered by purchasing a joint and last survivor annuity that pays payments for as long as either spouse is alive. So by now you've probably realized that a RRIF becomes very troublesome, especially when you reach age 71, and your only option available out of the three is to convert the RRSP to a RIF. And since most of the information that you're accustomed to researching and finding is probably focused on managing what you already have, and you've probably thought and accepted that this is the only way. So you may not be even aware that there are other alternatives available to you that you may not know. So let's take a step back and let's evaluate this. The the real goals and objectives that you have. When we look at the income that you've earned, a portion of your money is going to be put towards saving. So let's use an example. You're able to save, let's say you earn $100,000 per year and you are able to save 20% of that or $20,000. Ultimately you're going to take that $20,000. And at least right now, the way that you're going about it is you're going to allocate it to what you believe to be the best option right now, which could be putting it into savings, putting it into tfsa, or putting it into an account like an rsp. And from each of these buckets, you're ultimately going to try to manage the growth and putting them into potential vehicles where some of it you'll put into principal protections like GICs that pay very, very low interest rates up until high risk items that give you higher growth in terms of the return on the capital that comes from that. But going through that journey, you're going to go through a emotional roller coaster of ups and downs and the swings that happen in the market. If the markets don't perform to what your expectations are and what you need, you're ultimately going to need to sacrifice to save more because the markets are performing poorly. So that's a very long, bumpy ride for you when you are going to that retirement journey before you convert that into retirement. And what we need to look at is when your money is stored in these accounts, we also need to see that you've given up control of the money. Since the tfsa, the RRSP and the rrif, these are registered government accounts, you've given up also your privacy to them because they're registered to them. So they have visibility in seeing what is in your accounts. And in some cases, especially for a tfsa, if the way that you're using the TFSA doesn't match the rules that the government expects it to be, they can actually tax it, even though it's labeled as a tax free savings account. And even more recently, especially in the recent events of 2022, you're actually putting it in the direct line of sight for them to do things like potentially even freezing your accounts because it's registered with them. When we look at some of these accounts, your money is in prison like it is in an RSP or a riff. And if you do decide to use it, you're going to interrupt the compounding and potential growth of this money. Now let's also look at, when it comes to your death, whatever's left in the account will be paid to your state. In the case of the RSP or the rif, it'll be deemed to have collapsed. Your farewell to this planet would actually be a tax bill to the CRA that your executor would have to administer for you. This doesn't sound like a very positive outcome to leave behind this planet when it's your time. Now that you know the roadmap of the three options the RRSP will eventually turn to. If this is isn't something you don't want to walk into, what else can you do? All you need to do is be willing to explore something outside of the traditional realm of financial knowledge of the majority. I mean, while everyone else is focused on keeping track of their tax credits, minimizing their taxes, splitting their income, keeping track of their limits, whether or not how much taxes they're going to pay. This is a very complicated, stressful and gut wrenching. And also you might have to go through the gut wrenching rollercoaster of a stock market while everyone else is focused on keeping track of their tax credits, minimizing their taxes, splitting their income, going through the gut wrenching rollercoaster of a stock market and the drama from our government. I'm here to tell you that there are other options available and it's actually through a properly designed whole life insurance policy combined with great coaching and proper planning, here are some of the benefits that can come from it. Well, you can actually access your money at any point in time with no compulsory minimum withdrawals that would be added to your income. So it wouldn't trigger taxes if this was properly structured. Actually you wouldn't pay any taxes on accessing this money, which places also no threat on your old age security benefits and the clawback that the government would penalize you for. So all of your hard working money that you deposited into your policy can be accessed without interrupting its compounded growth. What you're accustomed to is you've got to put your money into some form of investment which means exposure to risk of it going down in order to get a return of a higher outcome. Well, that actually can be different in this circumstance if you're putting all of your hard working money and depositing it into your policy and this can be accessed without interrupting the growth. And since there are contractual guarantees built into these policies, there's no exposure to the amount going down since there are contractual guarantees in this policy. So all of your hard working money that you deposit into your policy actually can be accessed without interrupting its compounded growth. And when you're doing that, there's actually also contractual guarantees built in to these contract designs. You avoid the roller coaster and temperament of the stock market going down and also minimizing the intervention of governments. Because the cash values and the policies don't go down, they only go up. They grow actually every single day. Imagine being over 71 with the peace of mind, seeing your values increase every single day. You can't pay for this piece of money. And instead of leaving behind a tax burden, imagine leaving behind a death benefit. Because this is an insurance policy that gets paid tax free to your beneficiaries. And that if this is properly planned, this should extinguish. This could also extinguish any taxes you owe at death. This goes without saying, the earlier this gets implemented, the better the outcomes can be. So let's show an example where you've built up the same amount of money. Remember that $1 million? Well, instead of building it up in your risk and having that being withdrawn in the rift, let's look at the example of one that was built in the RIF to be withdrawn under that proposal, which you've seen. And also let's look at the same amount of money built up in a properly designed whole life policy to be withdrawn under that proposal. So let's look at the example. So these values that you see here are actually based on a similar policy design of someone who gets to their age in terms of 71 and has built the exact same portfolio value of 1,000,004148, except the money was accumulated and has grown as cash values in a policy. And based on that design, this individual would be able to access the 43,905 each year as part of their annual withdrawal plan from that properly designed and structured whole life policy. And this actually comes out completely tax free, which you will see. The next part is the CPP OAS that stays the same compared to the RIF plan. When we combine them together, the total annual amount would be 63,905. And because of how it's designed and is designed properly, the only base that gets taxed is actually this 20,000, which actually comes up to be 1,389. So each year you're actually getting as cash flow, net of taxes 60, 2005, 1 6. And over the 15 year period, again at the age of death, 85, the lifetime cash flows is 937,740. And the death benefit that gets left behind is 323, 611. So if we look at this individual design from this perspective. Again, starting with the same amount of money of the $1,004,000 you actually leave behind tax free 323,611. So in total, you've actually accumulated the benefit of 1,261,351. So if we look at the total amount of taxes paid alive, that's 1389 times the 15 equals the 20,008,35. So let's actually compare both of these examples together. So let's look at these approaches. This is all with starting with the same portfolio of 1 million 1 48, where this is the RIF and this is the retirement solution that we do here at Ascendant.

And using this as an example, we both started from the same starting point, except the road that we walked was very different. One, you would have built up the money in the RRSP and then converted it to the rif. I would do it under the retirement solution and still build up the same value. And if we were to follow now the withdrawal journey under the rifle, you would have withdrawn 736,922. This is that mandatory withdrawal that we've already covered. And of course both of us will still receive the CPP and oas. Now the difference though is your withdrawal was taxed, including your CPP and OAS. So you would pay 249,000 in tax, whereas only my CPP and OAS is taxed. So this is the amount that I've withdrawn until this year of death at age 85. So just from this example, you can see the retirement solution produces paying a better and more favorable outcome when it comes to the taxes. Now the next part is accessing the money outside of a properly designed and structured solution, you would be able to access the658,575. So in total, if we look at what's available, you would be able to withdraw $777,691 as your net cash flow after you've paid taxes under the journey of the rif. But in comparison, if I did the same thing, just in a different way, a different approach, I would access 937,740 over my life remaining lifetime. I therefore have come out in a more positive outcome of about 160,049. And you can see primarily that is driven by the taxes. So the next portion to talk about is what you leave behind. So by age 85, after you've withdrawn what you can and you've graduated from this earth, you've left behind 498,365. And following the rules in terms of what a RRIF is, it's deemed to have collapsed. And you would be taxed at the full amount would be included in your income for that year of death. And that year of death, that full amount of 500,000 would be included in your income. So that tax would be 249, 182. So the net benefit of what's left to your heirs is 249,182. Because we're using a life insurance product, the death benefit that's remaining in terms of this design would be 323,611. So if we were to compare the net death benefit, this still comes out ahead in this example of 74,429. So not only are your heirs going to need to pay a tax of 249,182, they do end up getting left behind less than what this design has shown. So let's look at the amount of taxes that you've actually paid and also what you've received from the government. So the taxes paid under the RIF scenario, including while you are living and also while you're dead, you would pay 508,413. And if we look at the amount of CPP and OAS that you would have received, which is government entitlements that you would get is 300,000, the amount is less than the taxes that you actually end up paying. So the CPP and OAS that you would receive is less than the taxes that you paid over the lifetime of that portfolio. Again based on this example. But if we were to look at the retirement solution that is designed, you're going to receive 300,000 and your ultimate taxes that you pay to the government is going to be to 20,008, 35. And ultimately that's so that you have more money to live off of. And also you leave less money in terms of death. So the amount of taxes you can see comparatively in this solution, you pay much lower taxes. So what I want you to really understand is this illustration here isn't meant to to show you what the outcomes would exactly be like. This is for illustrative purposes, just for showing you that if you built the same portfolio value, if you took a different approach, here's what the possible outcomes would be. This is again not meant to show you that this is what the outcome exactly is. Please make sure that you speak with someone who can talk to you about both of these options so that you can properly assess and make your own conclusions and decisions. So when it comes to your retirement, I wanted to show you that there are different ways to accomplish what you need. And it actually starts with accepting something different from these government plans exists. And it actually starts with taking control of the banking function as it relates to your needs in your life. If you think about it, you're the one who has worked very, very hard sacrificing and building up that portfolio. Not only are you building up that portfolio, if you build it in the rsp, you're ultimately the one who's taking the risk. You're the one who has surrendered the control in the outcome of it. You don't actually know the outcome of how much you would be having at your retirement age. And not only that, as you are the one taking the risk, building the portfolio, exerting the efforts in building all of this, the government is taxing you along the way. And as they are taxing you along the way, what's counterintuitive is when you are no longer working and you are actually accessing money from your pool that you've built up, whether it be an RSP or a rifle, you're eventually paying taxes to get that money out. And when you're paying taxes to get that money out, in some cases, like I've shared with you in here, you could eventually be paying more taxes than what you've been paying through your working years. And that honestly, in this sense, you may want to ask yourself, does that even make sense? When you are no longer working, you're paying potentially more taxes and than you would be when you were actually working. So if you want to learn more, make sure you visit watchibc.com where you'll get a free 90 minute training on what the process of becoming your own banker looks like. Until then, thank you for watching. Make sure instead of disliking my video, you send the dislikes towards the cra. Thank you and see you later.