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Name: IXXX XXXXXXXX
My question is: Canadian-specific QUESTION: Mr. Ingram
My question concerns the maximum you are allowed to withdraw
(yearly) from your locked-in RRSP(at retirement). A workmate told me it is 6%
of the total rrsp per year. ie.. 400,000 x 6% =24,000/yr. I say that a
person would be better off to accumulate 3-4 quality positive-cash flow
properties,which I am sure would bring in more than 24,000/yr. in rental.
your comments
please. --------------------------------------------------------------------------- David Ingram replies.
You workmate could be right. If you decide to take a
life annuity, it could very well work out to $24,000 a year. On the other
hand you have the right to shop your money around and it would be a rare
situation where the company which is holding your locked in plan were to have
the best rate.
My favourite story was a "way back when". Dennis
Cunningham, president of Fidelity Life challenged me on the Gary Bannerman
show. I had said that someone should never roll over their plan within the same
company.
Dennis Cunningham showed up to contradict this on air and Gary
Bannerman, bless his soul, allowed me free rein. To be honest, he did ask
me if I was "sure" I was right.
I said "no problem" and showed up at the studio in blue jeans
and turtleneck with my motorcycle helmet under my arm and an envelope full of
papers stuck inside my shirt.
Dennis Cunningham was there in his three piece pin striped si\uit
looking exactly like his position, president of a major Canadian Life Insurance
company.
You have to realize that this was in 76 or 77 and life
insurance was still sold almost exclusively by captive agents. Only a few
brave souls such as Jim Rogers of Rogers and Company (now at the corner of 8th
and Burrard) would actually "shop" your money for the best rate.
The papers I had in my envelope included some really neat
paperwork and rate quotes from about ten life insurance companies to roll an
amount of $100,000 into a life annuity.
The best rate as I remember it was from SUN LIFE at about
$1,100 a month for life.
The worst rate was about $800 a month for life, a difference
of $300 a month for life. As I remember it, Fidelity Life was at the bottom end
of the scale. The silly part of this was that Dennis Cunningham was not
there representing Fidelity Life, he was representing the Life Insurance
Industry and his company came out looking silly.
Actually, it got sillier.
I asked Dennis if he recognized a publication called the FLAC.
He did. He should have, it was the company newsletter and stood for Fidelity
Life Assurance Company. I also asked him if he
recognized one of the FLAC Training manuals I had and he admitted that it was
one of his company's salesman training manuals.
I then casually mentioned (to the delight of Gary Bannerman,
the host) that I had written most of that particular manual and written most of
the edition of the FLAC Newsletter I had shown him.
No one had bothered to think that the David Ingram he was
challenging was the same David Ingram who had written all sorts of Fidelity
Life stuff (like this newsletter) for the Saskatchewan Office of Fidelity Life
which my father had Managed.
-----------
End of that story. I put it here to show that I do have
old and deep life insurance ties and was licenced myself with Dominion and
Aetna Life for parts of 1964 to 1966 in Manitoba, Saskatchewan and British
Columbia.
I have also bought and sold over $800,000,000 in investment
real estate.
I prefer, as you do, real estate as an investment. I
prefer Life insurance as family protection. And, there are few investments that
can come close to the guaranteed return of a term to 100 life insurance policy.
And of course, a well balanced mutual fund portfolio has a
place in everyone's financial life.Now that I have
really confused the issue, I want you to re-read your question.
It is imposible to compare a locked in RRSP with a real estate
investment. the reason is that a locked in RRSP is limited in its
investment and withdrawal options by law. It is the control given to you over
what was a company pension plan. RRSP's cannot hold real estate directly.
On the other hand, you can structure a real estate investment
any way you want in any community you want with a multitude of methods of
ownership, methods of financing, and types of property purchased.
Get hold of Ozzie's Real Estate book titled "FORGET ABOUT
LOCATION, LOCATION, LOCATION." It will give you some really good real
estate investment tips AND you can do both. Keep the locked in Plan AND
buy some good investment real estate.
In fact, if you start taking your locked in plan out earlier,
you can use it to fund the real estate when you do not need the money out
of the plan so that inflation is producing income for you later on.
Hope this helps. Remember, individual real estate counselling
is available from Ozzie Jurock (ozzie@jurock.com)
and / or myself at:
David Ingram -
www.centa.com
the CEN-TA Group US / Canada / Mexico Income Tax and Working Visa Matters 108-100 Park Royal South West Vancouver, BC, CANADA V7T 1A2
(604) 913-9133 Fax (604) 913-9123
Cell (604) 657-8451 10 AM to 10 PM 7 days a week
If you are really serious, you would see both of us and also
call Fred Snyder at (604) 731-8900 for a written financial plan which will put
it all together.
You can hear Fred Snyder (and sometimes myself) from 2 to 3 PM
every Saturday on CFUN radio.
Unless you want an RRSP now, Please Do NOT call Fred until
after March 3rd. It is RRSP season. He is a little busy for another 10
days.
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