Money money money

Newspapers are full of financial advice at this time of year. But here's the surprise: if you're a low-income senior, much of that advice won't work for you. For example, suppose you are a low-income senior with an RRSP. Once you turn 71, you have to start making withdrawals from the RRSP. But that income will affect your Old Age Security, Guaranteed Income Supplement, and GST credits. If instead you have a Tax-Free Savings Account, you can invest money in it and withdraw money from it without reducing your income-tested government benefits.

If you were living on a low income before 65, your income may actually rise at 65, once you figure in CPP, Old Age Security and the Guaranteed Income Supplement. You could end up paying more tax than you did before retirement. You need to consider whether it's in your interest to take CPP early retirement benefits, to contribute to an RRSP or to a TFSA before 65, and to contribute to an RRSP or to a TFSA after 65.

I found a couple of useful websites that cover this:

• National Initiative for the Care of the Elderly (NICE)
• Open Policy Ontario