| State of the Union Address: My 2 Cents |
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posted by: ScubaDiva (reply) post date: 02.02.05 (11:06 pm) (laughing) I fell asleep listening to it. So, relying on your 'recap': Of course Bush isn't going to use words like cut or slash. It is spin. Granted, the Democrats just want to stick their head in the sand and claim there is no problem, blah blah blah. (If you recall, the Dems were actually screaming about SS reform last year - now that the GOP is picking it up, they suddenly change course) Question for you: say you pay into your system - when do you start collecting? are there restrictions on when you can start taking it? what if you die before you reach retirement age - does your family get to collect what you paid in? What sort of rate of return do you get? Not sure if you've heard of this but in 1982 (might be off by a year or two) but the city of Galveston, Texas opted out of SS due to a loophole and created their own private retirement fund for employees. The average amount of monthly checks for retirees is over 10k - where it would be approx $700/mo had they invested in SS. And we are talking about city gov't employees making 40k a year prior to retirement. If they croak before retirement, their family gets the account. Would you rather retire on 10k/month or $700/month? posted by: marysmith (reply) post date: 02.03.05 (5:18 am) A registered retirement saving plan (RRSP) is a savings plan for indivuals which allows them to defer tax on money to be used for retirement. Contribution limits for RRSP's plans are based on income and are tax deductible at the time of the deposit. The tax is paid when investment and interest is withdrawn. The contribution amount for taxiation year 2004 is 18% of income or a maximum of $15,500.00 . You can withdraw from these accounts at any time however there is a 10% withholding amount for income tax at the time of the withdrawl. This is also considered as income in the taxiation year in which the withdrawl is made. You can contribute to your RRSP until December 31st of the year you turn 69. At that time, you must consider the following options: You can cash in your RRSP outright and pay tax on the lump-sum amount. You can transfer the investments in your RRSP to a Registered Retirement Income Fund (RRIF) from which you must begin drawing retirement income. You will then be taxed annually on your annual income amount. You can purchase a Registered Annuity that will offer you a guaranteed income for a specified amount of time. When you die, the value of the funds in your RRSP will be included in your income and will be taxed when your final tax return is filed. However, if you have a surviving spouse, the RRSP may be rolled over tax-free to the survivor, who then becomes the annuitant, or holder, of the RRSP. This provision can also apply to a common-law partner. A tax-free rollover may also be made to a dependent child or grandchild, who may use the funds to purchase an annuity with a term not exceeding 18 years, minus the age of the child. I am a big advocate of purchasing RRSP's. posted by: marysmith (reply) post date: 02.03.05 (6:48 am) The rate of return on the RRSP depends on the particular fund that was purchased. There are various types of RRSP funds that can be purchased. There are money market/treasury bill funds, fixed income funds, equity funds, balanced funds, special equity funds, and global and international funds. The rate of return depends on the specific fund that was purchased. In order to optimize the interest accrued in your RRSP you should have a diversified portfolio. posted by: deviant1 (reply) post date: 02.03.05 (7:13 am) Reply to: ScubaDiva uh, what she said :) I suggest that anyone wanting answers about RRSP's direct there questions towards MarySmith posted by: marysmith (reply) post date: 02.03.05 (7:24 am) LOL! I try to keep myself well informed when it comes to RRSP's and the financial future. posted by: ScubaDiva (reply) post date: 02.03.05 (8:08 am) Reply to: deviant1 Taking the easy way out, eh? LOL Sounds a lot like our 401k's although if we put 'after-tax' money in, it won't be taxed when we take it out. The limits on the amount of contribution are more generous plus we can also set up Roth IRA's on top of that and contribute up to $2k a year that is tax-deductible as well.. Regardless, a lot of people fail to realize that there are NO guaranteed benefits for SS. The Democrats love to throw that word around, but in reality, there is NOTHING in the US code that states we are guaranteed ANY sort of return... posted by: deviant1 (reply) post date: 02.03.05 (8:25 am) Reply to: ScubaDiva is a 401K an employer match type thing or can anyone do it? Are there limits on the kinds of investments that you can make? Marysmith? Can you weigh in on this? I am claerly out of my element. Thank God for IT! posted by: ScubaDiva (reply) post date: 02.03.05 (8:31 am) Some employers will match - it varies from employer to employer. Most of mine will match 3-7% of your salary dollar for dollar or some wil match 50-75%... It can really vary. posted by: deviant1 (reply) post date: 02.03.05 (8:40 am) Reply to: ScubaDiva Reply to: April Is there a limit on what kind of investments you can make with a 401K? Also, they deduct canada pension as well here april. As far as Social Security/Canada Pension plan goes. I wouldn't be staking my comfort in old age on either of these things! Guaranteed or not! posted by: ScubaDiva (reply) post date: 02.03.05 (8:59 am) With a 401k, you are limited by the types of plans your employer selects to participate in. They may have an agreement with say, Fidelity, and Fidelity would manage it. Their offerings would include company stock, conservative, mid and aggressive plans... I've always worked for very large employers - so I've had about 15+ different funds to divy up my contributions into. posted by: marysmith (reply) post date: 02.03.05 (9:25 am) Not being an Americian I am not familiar with your 401K plan or your tax laws. I can say that in Canada the money used to purchase a RRSP is after tax money (if my understanding of your statement " after tax money" is correct and it is your net pay, what you actually take home after all deductions have been made). The amount that a person uses to purchase a RRSP is a tax deduction in the tax year in which it is purchased (18% of gross income or $15,500.00 for tax year 2004). Therefore the amount of tax that I pay in 2004 can be reduced by $15,500.00. In effect I am deferring the payment of income tax on $15,500.00 until when I withdraw the money or the dividend income. Most people turn their RRSP to a Registered Retirement Income Fund (RRIF) from which you begin drawing retirement income. You are then to be taxed on your annual income amount. You can also purchase a Registered Annuity that will offer you a guaranteed income for a specified amount of time. By reducing the amount of my taxable income I have benefited in two ways. First, is the RRSP(the amount in the fund) and the interest that I will make from it. Secondly, the tax savings of $15,500.00. (I have saved paying income tax on $15,500.00). So it is a win win situation. In Canada our SS is called Canada Pension Plan (CPP). The monies used to purchase an RRSP have no effect on the amount of CPP that I would be entitled to. The RRSP is considered as a private investment. I would have to check out the laws in Canada to determine if there is a law that guarantees the citizens of the payment of CPP. I am sure there is legislation in place that guarantees the payment of CPP. The CPP contributions in Canada are very high. In 2004 I paid the maximium amount which was $1,831.50. I am not sure of the amount of premiums that you pay on SS. posted by: marysmith (reply) post date: 02.03.05 (10:32 am) Does "The Social Security Act" not guarantee you that you will be paid social security benefits? On August 14, 1935, laws were past providing for a system of old-age insurance for workers at age sixty-five and survivor benefits for children or spouses of insured workers who die before age sixty-five. Money for the pensions is collected from a Social Security tax taken out of workers' and employers' earnings. The act also provided that money be returned to the states so they could set up systems of unemployment insurance. There are laws in place NOW that guarantee the payment of SS. These laws would have to be changed before the government could take away ss. Do you really believe the will of the American public is to do away with ss? BTW in Canada not only do we have to pay into CPP we also have to pay employment insurance premiums. These premiums cost us Canadians another $772.20 (maximum) a year (these premiums just went down). posted by: jennirae269 (reply) post date: 02.03.05 (9:47 pm) Um, you actually watched this and listened instead of just making fun of him, and looking for that guy with the "APPLAUSE" sign cuing the audience? I've already decided that by the time I can retire, around 90, there will be no social security, and I will have to fend for myself, just like I do now. posted by: angiekruger (reply) post date: 02.05.05 (4:11 pm) social security will not be bankrupt for about another 100 years. the real crisis is in medicare, but he wants to do nothing about that |
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