Since the Guaranteed Income Supplement (GIS) is an income-tested benefit, retirees who are receiving income from both CPP and RRSPs will generally not be entitled to it. But there is still a way to receive it. Consider a couple, both age 65, who retire with $500,000 in RRSPs and $200,000 in TFSAs. If they don’t touch their RRSPs until age 69 and postpone their CPP pension until age 70, they could receive the GIS for four years. Total GIS payments would exceed $59,000 after tax. Attractive as this sounds, it still might not be the most tax-effective strategy since it would put the couple into a higher income tax bracket after age 69. No GIS is payable at age 65 in this example because the couple had employment income in the year preceding retirement. Inflation in this example is assumed to be zero.
Can a couple with $700,000 in assets collect
the Guaranteed Income Supplement (GIS)?
After-tax retirement income by source
$90,000
80,000
70,000
60,000
GIS
50,000
OAS
RRSP/
RRIF
40,000
TFSA
30,000
CPP
20,000
10,000
0
65
66
67
68
69
70
71
AGE
the globe and mail, Source: Raphi Zaionz, Kosal Chhin,
Mygoals inc.
Can a couple with $700,000 in assets collect
the Guaranteed Income Supplement (GIS)?
After-tax retirement income by source
$90,000
80,000
70,000
60,000
GIS
50,000
OAS
RRSP/
RRIF
40,000
TFSA
30,000
CPP
20,000
10,000
0
65
66
67
68
69
70
71
AGE
the globe and mail, Source: Raphi Zaionz, Kosal Chhin,
Mygoals inc.
Can a couple with $700,000 in assets collect the Guaranteed Income Supplement (GIS)?
After-tax retirement income by source
$90,000
80,000
70,000
60,000
GIS
50,000
OAS
RRSP/
RRIF
40,000
TFSA
30,000
CPP
20,000
10,000
0
65
66
67
68
69
70
71
AGE
the globe and mail, Source: Raphi Zaionz, Kosal Chhin, Mygoals inc.
Source: (Raphi Zaionz and Kosal Chhin of Mygoals Inc., a Toronto-based firm specializing in tax-optimization and financial planning.)
Frederick Vettese is former chief actuary of Morneau Shepell and author of Retirement Income for Life.
