Hi again, everyone, Update on the above info, offered by my friend the accountant whom I first met at the investment group about 5 years or more ago. The guy who retired last year, without a pension, and who now borrows at about 6% (interest deductible when used for investment) and puts it out to earn about 12% (much of current return at low tax rate, some of it deferred, to be taxed at low rate when withdrawn). He says that the amount of current income that that can be obtained free of tax is closer to $50,000.00. Same provisos as outlined above - with possibility of bumping up the amount that is received free of tax given some of the situations as mentioned. Sorry that the situation applies only to Canadian residents, folks. Good wishes to you and yours. ole joyful P.S. We had a visitor/new member at our investment group last week, who said that she felt rather at sea, among such skilled investors. We told her not to feel bad - that in the investment game, there are no stupid questions. That she should ask any of us to explain various terms or situations that were unfamiliar to her. Each of us learns as we go, a step at a time. Compensation usually increases commensurate with increased knowledge! o j

Hi Surfergal, (Man... with that moniker I wann know where you live, where you surf, I wanna see pics & stories of the last road trip!) Where can I find information on alternatives? What you are specifically asking about falls in the realm of conservative, tax-avoiding and tax-free savings/investment accounts. BEFORE I PROCEED... it is important to state that your overall (personal? family?) portfolio and balance sheet needs to be structured to fit your stage in career earnings (on the rise? On the wane?) your time-to-target ("target" being financial freedom from safe passive income streams,) your risk exposures (health costs, employability, long-term care, asset protection, liability protection, etc.) and your "inflation defensive" investments (almost by definition, managed equities investment accounts.) NOW.... HAVING SAID THAT.... You can get tax-deferred market-like upside, and zero-loss-of-principal guarantees on the downside, with Indexed Annuities. They grow without any "tax bite" on your interest credits, and you finally only pay taxes on the interest (not principal) when you actually withdraw funds. There are a growing assortment of indexed annuities coming on the market specifically designed for the Boomer personality, who has no interest in annuitizing (which gives away control of the principal in return for steady income for the rest of your life,) but still wants guarantes of spendable income. ALTERNATIVELY, you can integrate your insurance coverage with the protective upside benefits of indexed annuities, and GAIN COMPLETE TAX FREE ACCESS to your interest income by using Equity Indexed Universal Life policies. While the two vehicle categories above are "indexed" to the broad stock markets (which means they have interest payments calculated to rise when the markets rise, but never lose principal when the stock markets fall,) they also somewhat lag the stock markets a bit, because the guarantees against downside losses cost the offering companies an insurance cost to protect your money. and how accessable would my funds be? All "safe" vehicles usually have a lock-in period. CDs are generally 100% locked-in, with penalties for early withdrawel. Indexed Annuities and Indexed Universal Life usually have a 'no penalty withdrawal allowance' of a percentage of your total account during their lockin period. and the tax implications on withdrawal? Annuities' interest credits are taxed on withdrawal. Cash-value Insurance interest is taxed IF withdrawn... NOT taxed if you take it as a loan to yourself, from your own account. These tools are not a silver bullet one-size-fits-all solution... but ought to be considered in the overall balancing of your total family portfolio. Cheers, Dave Donhoff Strategic Equity & Mortgage Planner

If you'd like to see the overhead transpaencies that Dale Ennis, editor of "Canadian MoneySaver" magazine used at that meeting, go to www.canadianmoneysaver.ca and look for "Tips and Tools". There's a lot of other interesting stuff on their website, as well - some of it of interest only to Canadians. Plain paper, no slick stuff - mostly writing; no ads. Pictures of the guys who write the two - three page articles, and contact info at the end of their articles. They are good about answering questions related to those articles, which are often rather condensed to fully cover a substantial issue, if rather sketchily, on occasion. The mag is totally subscriber driven, as they carry no ads. Subscribers asked for seminars with the guys who write the articles - they've been happening for several years. Seminars in winter in warm climes, on cruise, etc. Subscribers meet in about 40 locations in Canada. Ours in London has been meeting for over 10 years, I've been attending for six or so. Usually about 20 attend the monthly two-hour meeting and one learns a good deal about various approaches to money management there - we have to defend our viewpoints, as well. Plus about half of us adjourn to a coffee shop for another hour: manager brought us over a plate of goodies, a few months ago. Cost: gas to get there (and some from nearby communities ride together). (But the coffee at the after-meeting is costly, though they have "loyalty" cards (they're not the biggest chain in the country, by far - Starbucks ain't, either). We usually have the first guy to arrive get a card, then get it stamped for other members' purchases, so often we accumulate nearly the ten needed to get a free coffee during one evening's business. I think the corporation would say that one can only accumulate the increments on one's own accont - but management doesn't appear to care (haven't shut us down, yet, anyway). Sorry - I forgot that this isn't the "frugal" forum! Hope you're all enjoying a great week. One of the great things about retirement - every day's holiday. As I used to say when I was a personal financial advisor - "If you give me 10% of your money - I'll have you retire early". Actually, that message gives a false impression: my main philosophy was that I wanted my clients to learn how to manage their own money more effectively. ole joyful

Maybe a fund of about $1.333 million at about 3% would be a more feasible scenario. Not providing for sale of some assets, rather probable in a 1.5 - 2 million or larger asset portfolio situation (some paying almost no dividends or none), which would result in capital gains/(losses) to relate to current income. In earlier years, if one received $10,000. of dividends from Canadian Corporations, one added (Grossed-up) 25% to that figure to find the taxable amount of dividend income, to report $12,500. on the tax return. Then 13.333% of that amount, or Dividend Tax Credit of $1,666.63 was deducted from the tax that one owed. Non-refundable tax credits were available to most taxpayers, and those along with the dividend tax credits, allowed "taxpayers" with no other income to have about $27,000. solely dividend income to have nil tax to pay. Now this situation is called "Ineligible dividends" and the ratios are as indicated above. A new category of "Eligible dividends", which seems to include dividends paid by most stock-exchange-listed Canadian corporations, are grossed up by 45%, i.e. $10,000. cash is reported as $14,500. on the tax return - and have a Dividend Tax Credit of 18.9655% of the taxable amount, or $2,750. deducted from the tax owing. This, added to the Non-refundable tax credits, allows a "taxpayer" to have nearly $40,000. before becoming tax-liable. Which may be pushed higher in various other circumstances that I think that I outlined above. Most long-term Canadian residents, including non-employed people (e.g. housewives), qualify for Old Age Security at age 65 of about $5,800. annually. As this is a non-contributory Federal benefit, if the taxpayer's annual income is over about $55,000., part of that Old Age Security is clawed back by the gov't. The clawback amount increases, till the total amount of one's O.A.S. is clawed back when one's income is in the mid- to high $80,000.00s. Cash dividend of $40,000. plus 45% becomes $58,000. on tax return, plus $5,800. O.A.S., close to $64,000. taxable, will result in substantial clawback of one's O.A.S. benefit. Plus reduction in senior's Age credit, which reduces with increased "income" - whether "real" or "imagined" income! "Gross", huh? Canada Pension Plan (mandatory contributions by both employer and employee, therefore a contractual benefit) allows members who are "substantially retired" (rather loosely defined) to stop contributing and begin to claim benefits at any time between age 60 and 70, with 6% annual reduction if claimed under 65 and 6% annual addition if over 65. Taxable. Private pension plan benefits are available to some people. Benefits of up to $1,000. from private pension plan or RRIF payments qualify one for a non-refundable tax credit, dollar for dollar, up to $1,000. If one is age 69, partial owner (the government being the other partial owner) of a tax-deferred retirement account (RRSP), it must be closed out by the end of that year - or the rules provide that it will be closed out as of Dec. 31 of that year and the total amount added to income in that year. Scarcely anyone chooses this route!! Most personal money managers prefer to use the RRSP money: 1) to buy an annuity (not so hot an idea in these low-interest times), or 2) to roll over into a Registered Retirement Income Fund. With a RRIF, no more deposits allowed, and required to remove at least a given percentage annually, beginning at about 7.5% and rising to 20% annual withdrawal at age 90 and later. Residue in a RRIF on owner's death: if no spouse, infant or disabled dependent kid is added to deceased's income in year of death, or can be fully transferred to one in spouse's name with no tax consequences - yet. Residue is added to current income in year of surviving spouse's death. Where these or other income situations are obtained, the tax reduction is still substantial - but one doesn't avoid tax entirely: one is then a taxpayer (no quotation marks)! There are some other games that an astute portfolio manager can employ, if she/he is willing to a take some moderate short-term risks. There are several fairly smart women in the monthly investment shareclub that I've attended for about 7 years. Good wishes for wise and constructive use of retirement assets. ole joyful