What Vidda does not model

Vidda understates CPP for younger workers, and the gap is not small. CPP was enhanced starting in 2019 and phases in over roughly forty years, so someone retiring in 2065 will receive materially more than someone retiring today. Vidda uses today's figures. They are right for people at or near retirement and wrong for everyone else. If you are in your thirties or forties, Vidda is understating your CPP by somewhere between $1,000 and $5,000 a year in retirement. Your position is better than the plan shows.

A spending goal you cannot afford before retirement is not flagged as a shortfall. Vidda's shortfall check looks at your retirement years. If you plan a purchase for next year and your savings will not cover it, the tool that priced it will say so, but it will not appear in the plan's shortfall diagnosis. Look at the tool's own answer for anything you have scheduled before you retire. A purchase your savings cannot cover makes your plan look better than reality.

Spending before retirement is missing from the expenses chart. The chart starts at your retirement year. A goal you have funded for an earlier age is in the projection and in the tool's result, but you will not see it there.

If you borrow for a purchase, it is all or nothing, and the interest is not deducted. Where savings fall short, Vidda borrows the whole gap or none of it. It also does not treat any loan interest as deductible, which is correct for most personal borrowing; where your interest would be deductible, your plan shows more tax than you would pay. And before you retire, Vidda assumes every loan payment is made, even when your pay or savings could not cover it. The tool that priced the purchase warns you when that happens, but your outlook does not count the gap, so there your plan looks better than reality.

Three related gaps, all stemming from the same thing: Vidda models a non-registered account as a balance that grows, rather than as specific holdings producing specific kinds of income.

Withdrawals are over-taxed. Vidda treats every dollar you take out of a non-registered account as half taxable gain. In reality part of any withdrawal is your own money coming back, which is not taxed at all. For an account that has been growing fifteen years or more this costs you roughly $1,000 to $10,000 a year of overstated tax depending on the size of the account. For an account you funded recently, from an inheritance for instance, the overstatement is much larger, because almost all of it is principal.

You can correct this on the account itself, and the math matters. The field asks what share of each withdrawal is taxable, not what share is growth. If roughly 70% of your account is growth, only half of a capital gain is taxable, so the figure to enter is 35, not 70. Entering 70 would tax you at about double the real rate. The field's own hint says the same thing. One caveat: it is a snapshot, and as the account keeps growing the true share drifts upward, so it goes stale.

Annual distributions are not taxed. Real non-registered holdings pay out interest, dividends and distributions every year, and those are taxable when received even if you reinvest them. Vidda grows the account untaxed until you withdraw. Over a twenty year build-up this understates your cumulative tax by somewhere between $5,000 and $30,000 on a portfolio over $200,000. This one makes your plan look better than reality.

Dividends are not given their special treatment. Canadian dividends are taxed more favourably than ordinary income. Vidda does not model dividend income separately, so it misses this. Combined with the two above, a retiree holding $200,000 or more in dividend-paying Canadian stocks could be out by $1,000 to $3,000 a year in either direction.

Credits do not move between you. In real life a higher earner can claim a credit for a spouse with little income, and unused age and pension credits transfer to the other return. Vidda taxes each of you with only your own credits. Where you have pension income to split, Vidda already captures most of the same benefit, so this rarely matters. Where you do not, meaning your retirement income is all CPP, OAS and non-registered savings with no RRIF or workplace pension yet, Vidda overstates your tax by roughly $1,500 to $3,500 a year. Your position is better than the plan shows. For a Quebec couple the Quebec half is now modelled: credits one Quebec return cannot use reduce the other's Quebec tax. The federal half, and every other province's, is still missing.

The survivor's CPP follows the law, with a few simplifications. If your partner's plan has them stopping work before 57, and they die before then with no CPP figure entered, the survivor's pension is too low, because Vidda spreads their working years over a full career where the law averages only the years up to the death. If that partner's plan has them working fewer than ten years, the survivor's pension may be paid where the law would pay nothing. Vidda caps a survivor's own pension and survivor's pension together at one figure, where the law caps only part of it, which can be off by a few hundred dollars a year either way. And the children's benefit is not modelled. The first and the last make your plan look worse than reality, the second better.

A survivor under 65 does not get the pension credit on an inherited RRIF. In law, RRIF payments received because a spouse died earn the pension credit at any age. Vidda gives the credit on RRIF income only from the survivor's own 65, so a survivor under 65 drawing on it is shown about $300 to $460 a year more tax than they would pay. This one makes your plan look worse than reality.

Vidda does not model the Allowance for the Survivor. This is a benefit for a low-income widow or widower aged 60 to 64. If it would apply to you, Vidda is showing you less income than you would have.

Beneficiary designations only affect the estate view. If you set an account to pass to your estate rather than to a named beneficiary, that changes the estate figures. It does not change the year by year projection, which assumes everything rolls to the surviving spouse at the first death. If you have named anyone other than your partner on an account, the survivor's years look better than they would be.

Several workplace pensions share one survivor percentage. If one of you has more than one defined benefit pension or annuity, the survivor receives the average of their survivor percentages on each, not each pension's own. An annuity's own percentage is not read, and a pension not yet paying at the death still counts in the average. It can go either way, depending on your pensions.

Your budget starts when you retire, not when your partner does. If your partner retires first, the plan assumes your pay covers your living costs until you retire too, as it does for every working year. If it would not, your plan looks better than reality. If it would, your partner's pension and benefits in those years are not saved either, and your plan looks worse than reality.

After the first death, the spending stage follows the survivor's age. The survivor's share of the budget is taken from the early, middle or late stage that matches the survivor's own age and retirement. A younger survivor goes back to an earlier stage, which usually costs more, and an older one moves on to a later stage, so it can go either way.

A care home fee or rent entered for two of you is not halved after a death. It is charged in full in the survivor's years, which makes those years look worse than reality.

Deposits by a partner who is still working can stop too early. Each contribution schedule follows the working years of the account's owner, and a joint account follows yours. So if you retire first, your partner's deposits into a joint account, or into an account in your name, stop when you retire, and deposits into a spousal RRSP stop when its owner retires, even while the spouse paying in still works. The money is treated as spent. Put the schedule on an account in the working partner's name where you can. This one makes your plan look worse than reality.

Spousal RRSP withdrawals are taxed to the contributor for too long. The law taxes a withdrawal to the spouse who paid in only for contributions in that year and the two before. Vidda's window runs a year longer, and it does not limit the amount to what was paid in. That usually makes your plan look worse than reality, since the contributor usually has the higher income, and better where the owner does.

Vidda does not model the Guaranteed Income Supplement. GIS tops up OAS for seniors with little other income, and it can be worth five to thirteen thousand dollars a year to someone who qualifies. For a single person it phases out above roughly $22,000 of other income. For a couple the test uses your combined income against couple thresholds, so the point where it disappears is different again. If your retirement income will land anywhere near those levels, Vidda is showing you materially less money than you would actually have, and this is the largest single omission on this page.

Provincial supplements are also missing. Ontario GAINS, the BC Senior's Supplement, Saskatchewan's Low-Income Tax Credit and their equivalents elsewhere are small individually, a few hundred dollars a year, but they add up over a long retirement. Same direction: your real position is better.

Vidda models a business as something you own and sell, not as a company that earns and pays you.

You can tell Vidda that a business pays you an amount each year, but that money is taxed at full ordinary rates. There is no way to say your corporation pays you $60,000 a year in eligible dividends, which are taxed considerably more lightly. There is no corporate tax, no capital dividend account, and no salary versus dividend decision.

So an incorporated owner-manager who enters their corporation and their intended draw gets a plan showing materially more tax than they would really pay, whichever way they enter it. If you are planning to leave money in the company and draw dividends through retirement, Vidda does not currently serve that pattern. We would rather say so here than have you find out from a number that looked right.

The lifetime capital gains exemption limit is not tracked. If you mark a business sale as exempt, Vidda exempts the whole gain no matter how large. The real exemption is capped at roughly $1.25 million per person. Above that, your plan is showing you more after-tax money than you would keep.

The amount for a person living alone is not modelled. This is worth about $304 a year in credit to a Quebec resident who qualifies. Vidda does not ask whether you live alone, so it cannot apply it.

Several smaller Quebec credits are also missing, including the senior assistance amount, the solidarity tax credit, and the credit for home support services for seniors. Most are worth a few hundred dollars a year. The home support credit can be larger if you actually buy those services, which Vidda does not model at all.

QPP is treated as CPP. The contribution rules and benefits differ slightly. The effect on a long-range projection is negligible.

Quebec's deduction for workers is not taken, nor the deduction for the enhanced part of QPP contributions, so while you work your Quebec tax is a few hundred dollars a year too high.

A couple's pension split is the same on both returns. Quebec lets you choose a different split on its return from the federal one. Vidda uses one for both, so a couple can pay a little more Quebec tax than the law requires, about $75 a year for two people of 66 with $40,000 of pension each.

All of these run the same direction: Vidda shows you slightly less than you would have.

The disability tax credit is not modelled at all. It is worth roughly $1,600 a year or more once federal and provincial amounts are counted, and it transfers to a supporting spouse when unused.

This one is worth flagging harder than its size suggests, because Vidda does model RDSPs, and qualifying for the disability tax credit is a precondition of having an RDSP. So the households using that part of the app are exactly the households being overtaxed by this gap. Your real position is better than the plan shows.

The workplace pension Vidda estimates at setup has no legal limits. If you said at setup that you have one, Vidda adds “Workplace pension (estimated)” until you enter your own figures: 2% of pay for each year worked, paid in full from its start age, with no dollar cap and no reduction for starting before 60. Above about $196,600 of pay, or when retiring before 60 without enough service, that is more than a registered pension could pay, so your plan looks better than reality until your pension statement replaces it.

Before 65, an annuity is taxed like a workplace pension. An annuity bought with RRSP or your own money does not earn the pension credit before 65 and cannot be split with a spouse, but Vidda gives it both from the day it starts. Under 65 that shows less tax than you would pay, a few hundred dollars a year and up to about $2,500 with splitting, so your plan looks better than reality.

An annuity bought with non-registered money is taxed in full. In law only its interest is taxed, and the capital in each payment comes back tax-free. Vidda taxes every payment, so on $30,000 a year it can show $3,000 to $6,700 a year of tax you would not pay. This one makes your plan look worse than reality.

If you are single, a defined benefit pension pays nothing until you retire. Even if you set its start age earlier, Vidda will not pay it while you are still working. In a couple's plan it does pay from the start age you set. The two behave differently and this is on the list to reconcile. The same is true of an annuity. If you are single and would draw either while still working, this one makes your plan look worse than reality.

A LIRA becomes a LIF when you retire, at any age. Vidda converts it at your retirement, or at 71 if that comes first, and where your province allows a one-time unlock of half, grants it then. The law sets a minimum age, usually 50 or 55. If you retire before then, Vidda lets you draw this money years before you could, and your plan looks better than reality.

The unlocked half can land in a TFSA. It goes to your RRSP or RRIF if you have one, and otherwise to your largest account you can spend from, which can be a TFSA. Money that lands there becomes tax-free without using TFSA room. This can happen at any retirement before 71, and it makes your plan look better than reality.

A workplace defined contribution pension becomes a RRIF when you retire. From then it can be drawn in full, where the law keeps it locked until 50 or 55. If you retire before then, this one makes your plan look better than reality.

In Manitoba, a LIF pays out less after a good year than the law allows. The law lets you take what the LIF earned the year before when that is more than the usual limit. Vidda uses the limit alone, so a plan can show a shortfall the law would not impose. This one makes your plan look worse than reality.

CPP and EI are not deducted from that income. Vidda reports the income gross. At $20,000 a year of part-time work, CPP contributions would be around $1,000 you never actually take home, so the after-tax cash Vidda reports is high by about that much. That $20,000 figure is the default on the part-time work tool, so this is roughly the size of the overstatement most people using that screen will see.

RRIF minimums always use your own age. Before the first payment the law lets you base them on a younger spouse's age instead. Vidda always uses the owner's, so it takes out more each year than you would have to, taxed sooner rather than lost. This one makes your plan look slightly worse than reality.

A RRIF held while you are still working may not pay minimums. For a single person's plan, Vidda does not apply forced RRIF minimums before retirement, though in reality they apply from the year after the account opens regardless of whether you are working. For a couple's plan it does apply them. The two differ, and this is on the list to reconcile.

Inheriting an unconverted RRSP converts on the wrong schedule. If a spouse dies before their own 71st birthday, Vidda converts their RRSP in the year they would have turned 71 rather than in the year the survivor turns 71. When there is an age gap between you, the timing is off. It can go either way: when the survivor is younger, the conversion and its minimums come too early, and when the survivor is older, too late.

A deduction bigger than that year's income is lost. If you route a windfall, a sale, or a downsizing gain into an RRSP and the resulting deduction exceeds what you earned that year, the excess simply disappears. In reality it would carry forward. Vidda does not model the carry-forward, so it shows more tax than you would pay. Nothing else carries forward either: a credit you cannot use in a year is lost the same way.

Vidda models policies in a deliberately simple way.

Cash value grows at a rate you enter rather than following an insurer's actual schedule, and premiums do not build it. The death benefit is a flat face amount with no riders, paid tax-free. Premiums are level, never indexed, and are only charged against the plan in retirement, on the assumption that working-year premiums come out of wages. Whether the cash value makes your plan look better or worse depends on the rate you enter against your insurer's own schedule.

Not modelled at all: policy loans, using cash value as collateral, premium offset, universal life investment accounts, and term renewal or conversion. For a renewal, add a second policy at the new premium.

The survivor coverage tool sizes a policy by whether the survivor's savings last. It does not target a legacy amount or a multiple of income, and the number it gives you excludes the premiums a real policy would cost. Because those premiums are left out, the coverage it suggests can be less than you would need.

Land transfer tax uses documented approximations. Toronto's municipal tax is modelled, but not Toronto's higher rates above $3,000,000, nor Montreal's upper tiers, and Alberta's title fee is below the current one and the territories' fees are left out: each of those shows less tax than you would pay. British Columbia's exemption for a newly built home is not applied, and Quebec's thresholds are 2024's, which show more. Nova Scotia uses the Halifax rate and Saskatchewan a registration-fee estimate. First-time buyer rebates are ignored, which does not affect downsizers. It can go either way, depending on where you buy.

The sale and the purchase settle in the same year. No bridge financing, no gap between homes.

The replacement home grows at the same rate as the one you sold. It can go either way, depending on whether the new home's value would rise faster or slower.

A province move is modelled from the move year onward for income tax, probate and land transfer tax. Partial-year moves, moving expenses, provincial health plan waiting periods, and Quebec filing details beyond the modelled brackets and credits are not. Moving expenses are left out unless you enter them as the move's other costs, which makes your plan look better than reality until you do.

A downsize buys in the province your plan is in at that age. To buy somewhere else, save a province move first. Otherwise the purchase pays your home province's land transfer tax, which can go either way.

A downsize sells tax-free, whatever you sell. The downsize tool offers every property and sells it as a home, with no tax, even a rental or a cottage. To sell one of those with its tax, use its sale plan instead. Used on a rental or a cottage, the downsize makes your plan look better than reality.

One edge case worth naming. If you sell a property for less than the mortgage on it, and every account you nominated for the proceeds is empty, the shortfall is forgiven rather than taken from your other accounts, which overstates your net worth by that amount. Taking it correctly from another account requires knowing the tax consequence of the withdrawal, and guessing would be a worse answer than this one.

Rental property. The rent you enter grows with inflation, and the property's value at its own rate. Rent is not tied to the value, so if the value rises faster than prices, the rent in your plan falls behind unless you raise it by hand. The effect is modest, and it can go either way.

Withholding tax on RRSP withdrawals. Vidda accounts for tax annually rather than modelling when it is withheld. Withholding changes when the government gets the money, not how much you owe, so the annual result is correct.

Pension income splitting. Vidda models this and searches for the best split. One wrinkle: the tax it saves shows up as a slightly higher account balance rather than as a smaller withdrawal. The money is there either way.

Joint accounts split evenly. A jointly held account is treated as half yours and half your partner's for income and tax, which is the usual case but not every case. Where it is not, it can go either way, depending on which of you would be taxed on more of it.

The medical expense tax credit. Medical costs in your budget are charged in full, with no credit back, which makes your plan look slightly worse than reality.