Why do people always assume you will be in a lower tax bracket when you retire?
If you have $1million in assets (in today's money) when you retire, 4% dividends puts you at $40K a year. Add in old age benefits; add in capital gains appreciation when you want to sell some stocks. You will easily be bumped back into 2nd highest tax bracket, rendering RRSP near useless.
1. If you are making $80K a year today at the highest tax bracket and you like to party hard and spend hard....you think that by the time you retire, you will only have like 300K in investment assets generating a paltry $12K a year in investment income, then yeah, RRSP is the choice for you.
2. If you are making $80K a year today and save at least 20% of that every year and reinvest diligently, and plan on having $1mil - $2mil by the time you retire, then RRSPs are pretty useless.
The only benefit of RRSP is compound tax free investing, but that is useless for the buy and hold group.
Plus, I'm not even mentioning defined retirement plans offered by companies.
If you have $1million in assets (in today's money) when you retire, 4% dividends puts you at $40K a year. Add in old age benefits; add in capital gains appreciation when you want to sell some stocks. You will easily be bumped back into 2nd highest tax bracket, rendering RRSP near useless.
1. If you are making $80K a year today at the highest tax bracket and you like to party hard and spend hard....you think that by the time you retire, you will only have like 300K in investment assets generating a paltry $12K a year in investment income, then yeah, RRSP is the choice for you.
2. If you are making $80K a year today and save at least 20% of that every year and reinvest diligently, and plan on having $1mil - $2mil by the time you retire, then RRSPs are pretty useless.
The only benefit of RRSP is compound tax free investing, but that is useless for the buy and hold group.
Plus, I'm not even mentioning defined retirement plans offered by companies.