Ahhhh....retirement just got more complicated.

**MomToTwoBoys** · 08-07-2008, 02:48 AM

DH kindly told me today that he isn't putting into an RRSP at work.

This is what I get for assuming things. I thought that the CPP and the RRSP were the same thing. I'm a moron.

The idea of starting Spousal RRSP is off the table now. In order for us to even put something into the Spousal RRSP, I'd assume we need an actual RRSP now. He may only be 32 and we have two pensions to rely on after he retires, but that doesn't keep me from wondering how we'll actually be come retirement. I'm thinking of putting money into something that's going to give us medium aggression on our returns and not just rely on the savings accounts to get us by.

**Greebo** · 08-07-2008, 05:26 AM

Have you and DH sat down with an actual financial planner to discuss this subject?

**monkeywrangler71** · 08-07-2008, 09:17 AM

Can you clarify your situation a bit, I'm having trouble sorting it out. Why is the Spousal off the table? Are you both working for similar incomes, and both have similar pensions? When you say you have two pensions, do you mean you both have a company pension, he has two separate company pensions, or you both have CPP? Is (are) the company pension(s) guaranteed income plans or are they investment plans (will they pay a specific amount on retirement or is he contributing to a fund that will pay based on performance)?

**MomToTwoBoys** · 08-07-2008, 01:57 PM

Originally Posted by Greebo

Have you and DH sat down with an actual financial planner to discuss this subject?

Not yet. We're in the middle of trying to figure out who to go through to get a financial plan set up. We may go to both of our banks and see what they say, then make a decision from there.

Originally Posted by monkeywrangler71

Can you clarify your situation a bit, I'm having trouble sorting it out. Why is the Spousal off the table? Are you both working for similar incomes, and both have similar pensions? When you say you have two pensions, do you mean you both have a company pension, he has two separate company pensions, or you both have CPP? Is (are) the company pension(s) guaranteed income plans or are they investment plans (will they pay a specific amount on retirement or is he contributing to a fund that will pay based on performance)?

Right now, I receive a pension through Veterans Affairs for injuries sustained while I was in the Marine Corps. I've been receiving that pension since September 2002. It will continue for the rest of the time I'm alive and kickin'. He has a pension through Canada Pension Plan, in which a portion of his paycheck is put away into a pension that'll start when he hits retirement age. An RRSP and Spousal RRSP are separate entities; this means that the RRSP would be his and a Spousal RRSP would be mine. He can choose to defer his RRSP contributions into a Spousal RRSP if he hits a certain income amount. If he didn't defer them, he'd suffer what's called "clawback".

http://www.professionalreferrals.ca/article-373.html

(Above is Spousal RRSP.)

[ame]http://en.wikipedia.org/wiki/Registered_Retirement_Savings_Plan[/ame]

(RRSP link with a nice explanation.)

The CPP (Canada Pension Plan) is guaranteed when he retires. The RRSPs would also be guaranteed when he retires. There's certain tax things that come with the RRSPs, though. If we do a Spousal RRSP and a regular RRSP, we can pay less taxes when the time comes.

**monkeywrangler71** · 08-07-2008, 02:31 PM

Okay, so if he has nothing except CPP, you definitely need to be doing something else. CPP is not the same as having a pension; a company pension typically guarantees a portion of your salary in retirement based on number of years worked, or contributes to a savings/investment plan with you. CPP is a social security program, not a retirement plan. The current maximum benefit is only $788 a month - the average payment is only $440.

If your husband has a pension plan available at work, then that would be the place where you would want to focus first. If he does not qualify or there is nothing available then you need to be looking at personal investments. Whether or not you choose to use RRSPs or non-registered funds will depend on your income level. If your income is in a high tax bracket - federally anyway, as Alberta has one flat rate - then it is typically better to register your investments in order to defer your taxes as it is likely that your marginal tax rate in retirement will be lower. If you are in a low tax bracket, RRSPs do not have any benefit.

You should contribute to a spousal rrsp when you believe that the non-working spouse will have a lower retirement income. That is not currently the case with you, as you have a VA pension and your husband has only CPP (which can be split between you anyway, giving you the higher income in retirement if nothing further is done). If you are going to open an RRSP at this point, it would be in your husband's name. Down the road, if you are not working and as his potential retirement income grows with the growth of the RRSP, then you should be opening another account in your name to which he can then make spousal contributions. The goal is to try to ensure that both partners have a relatively equal retirement income, which hopefully reduces your tax burden by keeping you both out of higher brackets.

And yes, at 32, provided you are financially stable, you should be investing more aggressively than a savings account. If you do not have the income level to benefit from RRSPs then you should definitely open one of the new tax free accounts that are going to be available in Jan'09. You will be able to invest in any vehicle currently available as a registered account, only instead of deferring taxes on the contribution you pay no taxes on the proceeds. This would make for a much better retirement for those whose current incomes make tax deferral a gamble.

**peanut** · 08-23-2008, 04:42 PM

I agree. We have CPP on DH and 2 pensions from different companies. AND an RRSP and spousal RRSP.

The thing is, you gotta look carefully at pensions nowadays. DH's first pension is for a job he worked 7 years...read...not much money...works out to $150/mth. His second pension only covers 40% of his working income. Think $24,000/year. And CPP is about $700/mth.

All told everything will add up to about $30,000/yr...without using our RRSPs. Those will be used to top up our income on an annual basis...and they aren't very big either.

I think you definitely need to be doing something! Especially if you plan to live in Calgary in retirement!

One way I got around a DH who didn't want to save was to buy a big house in an area that was going to increase in value (I bought location and structural quality) and we fixed up the houses...sat in them and waited for appreciation, then sold for a profit, which we invested.

Right now I sit in a home we could sell for $300K. It's too big for us. If we sell and rent a 2 BR apartment, we could live like kings for 31 years. Sounds good to me! Or I could move to a community with a lower cost of living and buy a smaller house for a lot cheaper. That too would work for us. I've got savings, it's just in the house...

Jean

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