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Case study in frugality
Old 12-14-2012, 02:45 PM   #1
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Case study in frugality

Here is a case study from today's National Post about two LBYM friends who will be affluent in ER. Way to go, ladies!

How two friends can save money by sharing a home, expenses and a plan | Family Finance | Personal Finance | Financial Post
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Old 12-14-2012, 03:50 PM   #2
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Thanks for posting this. Nice example of the benefits of frugal living. They're in great financial shape. One peeve unrelated to the ladies: the article classifies their savings as "monthly expense". For some reason I always prefer to see expenses and savings separately, and contrasted.
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Old 12-14-2012, 03:51 PM   #3
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Interesting article, Mead.

It sounds like one friend will have the lion's share of retirement income from a very nice pension and the article doesn't mention any survivor benefit; but I imagine each is the other's heir/co-owner of all assets so either would be okay financially as the survivor.
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Old 12-14-2012, 03:56 PM   #4
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Well actually, not being spouses does confer a disadvantage at the death of the first spouse, as follows:
How do Canadian inheritance tax laws work if the estate is inherited by a surviving spouse or common-law partner?

Any non-registered capital property may be transferred to the deceased taxpayer’s spouse or common-law partner.

For any registered assets (such as RRSPs and RRIFs), the deceased person is deemed to have received the fair market value of his or her plan assets immediately prior to death. This amount must be included in the income of the deceased person’s tax return.

However, it is possible to defer income tax if an eligible person has been designated as the beneficiary of the RRSP or RRIF. An eligible person includes a spouse or common-law partner, a financially dependent child or grandchild under 18 years of age or a financially dependent mentally or physically infirm child or grandchild of any age.
Canada Inheritance Tax Laws & Information | TurboTax Canada

That's one reason why I think they should be drawing down the RRSP sooner!
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