Should You Use An RRSP If You Have A Defined Benefit Pension Plan?

We got a comment from a viewer wondering how to deal with RRSPs when you have a defined benefit pension plan. In our office, we come across defined benefit plans more often than expected, so we'll go through a couple of different scenarios surrounding RRSP contributions when you have a defined benefit plan.

OUTLINE:
0:00 - Common Questions
0:34 - YouTube Comment Breakdown
2:24 - How Much Is Your Pension?
5:08 - Scenario With 2 Pension Plans
8:04 - Insurance Included With Pension
8:53 - Summary
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DISCLAIMER: The videos and opinions on this channel are for informational and educational purposes only and do not constitute investment advice. Adam Bornn is not registered to provide investment advice and as such does not provide recommendations - those looking for investment advice should seek out a registered professional. Adam is not responsible for investment actions taken by viewers and his content should not be used as a basis for investment trades.

[marylouwalsh]

Hi i have been watching your challenge and find them very useful. Your examples often are based on a couple versus a single person. Can you also consider in your videos examples for singles or older people who don’t have life long partners or have a second marriage.

[MegsCarpentry-lovedogs]

Real life Adam....you are discussing a question I had as well...perfect.

[AllieE]

I have a DB, knowing what I know now and if I could do it all over again, instead of the RRSP, I would use the $ to buy another house, would've come out 10x ahead!

[andrewc]

Great topic Adam. I have a DB pension plan.

[micheldevost]

Hi Adam. I’ve been waiting for this video for a while now. Thanks for the great insight!

[mimaroo]

My husband has a defined benefit plan and with CCP and OAS, we can live very comfortably on about half of the monthly payments. I'm a fair bit younger and until I retired a few months ago, due to back problems, I had saved about $100, 000 in savings. I am still adding to it and it's a nice nest egg, in case we need it. It all depends on what sort of lifestyle you are content with. We've never been overly extravagant and I do have a small online business that brings in some extra money as well. We did look at a buyout, but we didn't want to lose the benefits from his former job.

[Lynx]

Hubby and I have both retired me at 54 and him at 56 with each having defined benefit pension plans. We also have TFSA's, RRSP 's, Non registered account and individual stocks. We can easily live off of our Defined Benefit Pension plans without touching any of our other investments and that's before we even start taking CPP and OAS. Our biggest issue is when to take CPP and to make sure we avoid OAS clawback. Your videos are very helpful. Thanks.

[nonnasstitchingloungewithr]

Thanks for the great video Adam! I really appreciate your wealth of information! Pun intended!

[mikebowers]

Thanks Adam, you hit a home run on that one for me.👍

[GT-tmft]

Thanks, Adam. Great content as usual.

[dennisspackman]

When I was working I was also getting a defined benefit plan. I made it a priority to maximize my RRSP and my TFSA every year. To me it makes sense to have all three as extra income steams. The value of my defined plan is not high enough that it much affects my annual taxes. When I retired I converted my RRSP to a RIF so I with draw the required amount each year and maximize my TFSA for the tax year from that amount. I am 62 and do not have any health issues so expect I will not collect CPP until my late sixties or maybe age 70.

[paulpoco]

Guys at work retire early DB pension at 55 always say their take-home pay is the same as working, so then they say why work.

[paulpoco]

Healthcare you are talking about dental & extended? In my DB plan those are optional and you pay for those and generally people say not to take dental and self fund the dental.

[caperboy]

I’m single with a small DB pension and RRSP. I should be around $48000 / yr before taxes. I should be ok but I wish the government would do more to help us

[hopstiguy]

Thanks for all the great videos. My spouse and I each have a defined benefit pension plan. Together, we have RRSPs totalling about 200k. We are planning on retiring early, and we each will get a bridge benefit until 65, when our regular pensions will kick in- totalling about 200k between the two of us. Our idea is to draw down the RRSPs from 65-70, and then take QPP/OAS at 70. Does that sound like a reasonable strategy?

[CGB]

A good question for you. I plan to make between 68, 000 and $70, 000 per year when I retire either at the end of this year or by the end of June 2022. I have a little over $100, 000 in rsps. Should I take out my rsps at an accelerated rate and deposit that money in a tfsa?

[lynmac]

First off thank you so much for all the tutorials on YT. Been watching them for I am close in retiring. A very big help for those who does not know what to do and avoid hickups along the way. I am single 63 yrs old still working with 2 jobs making 60 thousand yearly. Planning on retiring at 66 or 67. I have RRSP in 2 different banks should I transfer my RRSP in one bank only . What are the complications if I do not ?I have a little over $150 K on both banks.

[davdride]

DB // PRA // DBA. This is the comb I have to finalize. Goal is for a early retirement

Adam cashing out a DB. From my experience. Takes up to 8 months with my employer so you have to give notice and leave 54 yrs of age if you wait until
You turn 55. The DB. Is lock with the financial institution. Link to my employer // if you take the DB befor age 55. There is a penalty fee of the DB

[wcg]

I think, if people with a DB pension can max out their TFSA (and FHSA if they are looking to buy their first home) first, then using that limited RRSP room makes sense. My wife has a DB pension and her RRSP isn't that significant because of the limited contribution room.

[djb-wm]

I saw that the claw back starts on OAS at 79000 and up