Well Tina here we are again here - we are - another YouTube moment we just
love this - don't we do - Now I think you you've been getting smarter haven't you
I've noticed - oh I think i have cause look everybody I have a new smart watch
so now I can see how many steps I'm doing and see how much I'm sleeping at night - Tina's
absolutely wired with her new toy - It's great so wonderful - We thought we would talk about
a subject that could be controversial in some respects but it's been working for us
and it's the whole concept of be rich but retire poor and before we get into that
we would like you if you're a new viewer to our channel - to please subscribe to our channel and
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retirement maybe you could share our video with them they might get a few tips out of it anyway
here we are - being rich - let's be rich but retire poor it's actually a financial planning
strategy so we, most of our information is going to come from Canada because that's
where we live but a lot of different countries will have similar programs to what we have
so hopefully it'll translate to your needs as well so what does the taxman only - see he
only sees income what you actually earn - for us small people who aren't super wealthy so yes the
taxpayer only sees income so, if you have capital if you have a million dollars say which is the old
adage to retire on which we don't agree with but say you got a million dollars in capital if
you put that into an investment and you didn't draw any income from it and it didn't generate
any dividends say you bought a million dollars of Facebook or Amazon stock they don't pay dividends
taxman doesn't see an income from it so you're poor you don't have any income but
you have a million bucks so this is what we're trying to flush around with this brief video -
Yeah we're really trying to say if you keep your income low that's the way to do it isn't it's
kind of like a bit of a secret - When when we first came to Canada back in the early 90s
I worked with a few people and one of the things that struck me was it seemed to be very
competitive about who was saving the most in their RRSP account or who had the biggest RRSP account
RRSP standing for Registered Retirement Savings Plan and so they were putting the money in so they
could get a tax credit for their current year's income to reduce the tax which is fair enough but
all of a sudden in Canada when you hit 71 you have to convert that into a Registered Income
Fund (RIF) and then you have to take out five percent a year so if you've got a million dollars
in your RRSP a lot of money you're going to be taking five percent of that monthly so we decided
in the late 90s that the investments were so poor we would put all our Registered Retirement
savings monthly savings into our mortgage so we paid our mortgage off earlier which - was great
wasn't it - and in those days the interest rates were between five and six percent so
in effect paying the debt off we were earning five or six percent on our money - and then when we
sold the house we got the big chunk of cash didn't we - we did which was good so then along came
what about seven eight years ago along came the TFSA which is a tax-free savings account
now you don't get a tax credit on the money you put in there and you can only put in six thousand
a year at the moment right but if you're an adult and you were at the age of 18 when TFSA came in
you can use all that back room so that's around 70,000 at the moment - and you're not going to get
taxed on that which is great - no it's a tax shelter so any money that you draw from that any dividends
that are generated in there so say you have a TFSA trading account those dividends are tax-free
once they hit the account - it would be true to say wouldn't it Norm that if somebody was
let's say earning around 60,000 a year they would probably be better just opening a TFSA and not
having an RRSP because it's more beneficial to them isn't it - it really is too yeah the
registered retirement savings plan really helps people who are earning in excess of a hundred
thousand two hundred thousand a year because they're paying taxes the highest rates in Canada
and hopefully in retirement your income will be less than that in a lower tax bracket so that is
the see-saw effect of that but for many of us who were just middle-income earners it really
didn't help us in other than the immediate tax refund that we would get once a year
- but there are lots of other things that are really helping us now aren't they Norm because now that
Norm turns 65 we officially qualify well I should he - Tina can't stop saying that 65 really rubbing it in - he
qualifies for all these different things that are out there and we wanted to tell you about things
that are available you might qualify for them and you might not - so this was some years back we
decided to aim to "retire poor" even though that we had the capital from our house (Tina yeah), so that
has been a strategy for us to keep our income low and it's amazing the programs that you qualify for
when your income is just low but enough to retire on - so some of these programs are, there is a
free dental program so it's set up - yeah Tina is very envious because I applied for the Ontario
dental program which is a relatively new thing that's coming out isn't it and lo and behold I
qualified because I'm poor - and I don't get it because i'm not 65 yet (-Norm I know) so Norm can go
and get his teeth fixed so if you had just a couple of fillings a year and a cleaning
they could mount up to a couple of thousand dollars a year so that's an interesting one
they also have GST programs - yeah so we get a rebate on the sales tax so that comes in every
month direct deposit into our bank account it's not a lot of money but because our income is being
managed to be low we qualify for it and then because of that we get another one,
- we get the Trillium which is an Ontario energy credit - once again because our income is low
and because your income is low you then qualify for a Guaranteed Income Supplement (GIS), from
the government which is like another little top-up pension - yeah so as well as the OAS
because you get OAS too don't you - (Norm CPP), - yeah so you get CPP OAS and then there's GIS it's like wow
it's like hitting the jackpot - and then we I sort of love reading the Red Flag forum deals
in Canada there's this site called Red Flag and they have a forum and they have a section
on that forum for hot deals, well last month I saw that somebody posted on there that Telus
Mobility one of the major cell phone companies in Canada had just launched a seniors program so
if you were on surprise surprise Guaranteed Income Supplement which good old Norm is on
I qualify for a cell phone plan with a free cell phone with no contract for $25 a month plus tax
but that gives me a data package of three gigs, gives unlimited nationwide calling
unlimited nationwide text messaging hey it feels cool to be poor
- and it's great because they would have either given us a smartphone or we could have used
our existing one and we were fortunate weren't we because our Son had given us a phone - so we
were just using it as an iPod basically it's an iPhone 7 he got an upgrade from
his telephone company his cell phone carrier every two years he gets a new phone so he gave it to us
mainly for Tina because she takes pictures on it when we go and travel so we had this
smartphone that we weren't using so now Telus has given us a plan that we can afford - which is great
so we're looking forward to using that - so I think we don't want to be as a glib saying
that if you're genuinely poor life is difficult and and you should qualify for all these programs
but because the way governments are at the moment and the taxation especially in Canada
retiring poor is a financial planning instrument that you might be able to work for yourself
yes that's all that was saying so that was our little
financial moment - yeah and finding out things that are there you just got to go look for
them haven't you - do your research that's why your good friend Google is always by our side
(Tina it is) - so thanks for watching please stay safe from this pandemic we hope you're all well yeah - we hope
you're all gonna have a great weekend - we certainly are - we are and so bye bye till next time bye