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I Need A Bridge!

Deferring your CPP and OAS to age 70 is an excellent strategy to maximize your retirement income. The increase in these benefits as a result of deferring them is attractive because there are actuarial calculations that improve the calculation well above inflation. As well, the enhanced payments paid to you after age 70 grow based on annual inflation adjustments which is not the case with your own investing.

Canadians who consider the strategy may want to receive income equal to the reduced CPP and OAS payments they would have received if they did not defer these payments until age 70. Here are some sources for the ‘bridge to 70’:

.if one spouse has a higher pension or RRIF they can split the income between them. If the receiving spouse and the transferring pensioner is receiving payment from an employer-sponsored pension then that amount can be shared with the younger spouse. When the spouses are both over 65 then RRIF payments can be split. For example, transfer a portion of your registered funds into a RRIF so that it pays, say $2000/mo. to one spouse and he or she then split the payments so both have the missing cash flow on a tax-effective basis. 

.if one spouse, or both, have RRSP’s that are large enough to pay $1,000-$1500/mo. of withdrawals for each spouse for the 5 or more years of deferral until reaching age 70, then the deferred CPP and OAS benefits can subsidize cash flow after age 70, for life, for each recipient in response to the early RRSP withdrawals subsidizing the CPP and OAS deferrals. Each spouse would start their own RRIF at age 70, or, 71 based on their cash flow needs.

.non-registered investments can provide tax-effective cash flow. You will, after all be withdrawing your own capital. An efficient approach is to arrange a series of GIC’s each maturing at different anniversaries over the deferral period so that at each maturity you have another $12,000-$15,000 of capital plus interest released to you for spending for the ensuing 12 months in each case.

.if you are considering the sale of your house or a cottage ,by acting before your retirement  you can invest the proceeds  and earn interest or capital gains  from the sale proceeds which will easily replace the deferred CPP and OAS payments.

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