The answer to today’s Wordle was TRASH.
Don’t worry. I wrote this last week, so I didn’t just spoil anyone’s fun. Nevertheless, at the time of writing, it felt fitting. We are creeping towards the time of year I like to call “men’s shorts season”, and aside from its obvious association with temperate weather, it can be a difficult transition for the bulk of us. I think I have such an aversion to the “meshort” or “menort” because, as goes with idols, we mimic their opinion. And my second favorite writer in the entire world once said,
“One of the biggest changes in my lifetime, is the phenomenon of men wearing shorts. Men never wore shorts when I was young. This is one of the worst changes, by far. It’s disgusting. To have to sit next to grown men on the subway in the summer, and they’re wearing shorts? They look ridiculous, like children, and I can’t take them seriously. My fashion advice, particularly to men wearing shorts: Ask yourself, ‘Could I make a living modeling these shorts?’ If the answer is no, then change your clothes. Put on a pair of pants.” – Fran Lebowitz.
During difficult periods of my life, I have always found words to be grounding. And with the “menort” season upon us and everything else in general feeling so topsy-turvy-upside-down, I figured, what better way to start the week than with some breezy words…
You’ve heard me talk (scream) about TFSAs and RRSPs at the outset of my financial literacy journey. But recently, I came across a myriad of other savings plans that start with the letter R. I didn’t have a clue as to what they were. I will try to make this feel as easy as a Sunday morning and as grounding as possible (while still, of course, having to write about savings accounts and retirement plans).
1.RRSP (Registered Retirement Savings Plan)
In the effort to keep things serene, because last week’s WORDLE was far too representative of life these days, I’ll link a more extensive article on RRSP’s here. For the beach-read version:
An RRSP is an account, registered with the federal government, that you use to save for retirement. It’s fun and sparkly because it has special tax advantages (like your savings can grow tax-free until you are ready to retire, and your contributions are deductible come tax season). It’s like the government recognized that adults are just overgrown, over-stressed children and wanted to make a little catch-all to help us when we are old and cannot help ourselves. Your employer may also do this truly adorable thing where they match your RRSP contributions, so ask your boss about that.
2. RRIF (Registered Retirement Income Fund)
Think of this as a fun little extension to the RRSP. An RRIF is an account registered with the federal government that gives you a steady income into retirement. What a beautiful image; wrap around porch, good book, lemonade, and a steady income for doing no work. I don’t know why people fear old age so much. I would take to some drastic measures right now to live in this reality.
Before, you were putting money into your RRSP to accumulate savings for retirement. Now, you withdraw that money from your RRIF as retirement income.
RRIF Rapid Fire:
· Before the age of 71, open an RRIF by transferring money from your RRSP.
· Once it is set up, you can’t make any more contributions to the plan.
· You choose the type of investments to hold in a RRIF (ETFs, stock, bonds, etc., – we will all be seasoned investment pros by that point)
· You must take out a minimum amount from your RRIF each year (the amount increases as you get older)
· (This one’s dark) If any money is left in your RRIF when you die, it will go to your named beneficiaries or your estate
3. RESP (Registered Education Savings Plan)
I can’t believe I am writing to my peers about saving for their child’s education when I had Annie’s mac & cheese for dinner 3 nights in a row last week. But by some miracle, a few of you have children and houses and I seem to have missed the adulthood train, but it might come someday, and I’d like to be packed properly.
Most RESPs are opened for children, but you can open a RESP for yourself or another adult.
When your child enrols in post-secondary education, they can start taking payments, called educational assistance payments (EAPs) from their RESP. EAPs are made up of the investment earnings and government grant money in the RESP.
RESP Rapid Fire:
· Savings grow tax free. (This is obviously the theme of the “R” letter savings plans)
· For a child age 17 and under, the government makes contributions as a grant or bond.
· Lifetime maximum contribution of $50,000 per child.
· Withdrawals (called EAPs) are included in the student’s income.
· There is a wide range of investment options available for RESPs (refer to RRIF list, it’s all the same)
And for an unpleasant, unrelated finding I came across in my research:
Between 1995 and 2015, the average cost of 1 year of undergraduate tuition in Canada nearly tripled from $2,333 to $6,191. We can now all collectively groan.
4. RDSP (Registered Disability Savings Plan)
This plan was established to help parents and others save for the long-term financial security of a disabled person.
RDSP Rapid Fire:
· Savings grow, say it with me, tax free when in the plan
· The government makes contributions
· You can still get disability benefits
Until next week. Do the Wordle. Drink a lemonade. Prep for menort season.
Sending virtual hugs.