Pension Wealth: Earn $470/Month REIT Income to Offset the OAS Clawback

You can minimize the effect of the OAS clawback with passive REIT income. CT REIT stock and Northview Apartment stock can deliver reliable, growing income to pad your pension wealth.

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Receiving a notice from the federal government of Canada that you qualify to receive the Old Age Security (OAS) pension on your 65th birthday is exciting news. The long years you spent working were not for naught. Upon retirement age, you have pension wealth.

Whether you apply to receive the pension immediately or defer it to receive a higher amount, you have to consider the OAS clawback. The clawback is something you want to avoid, because it can reduce your pension wealth.

The OAS clawback is more popular than the milder OAS recovery term the Canadian government uses. It means that high-income earners need to repay some or the entire OAS pension. When your net income is above the set threshold, there will be a reduction in your pension.

The clawback is a big issue. Unless you agree on the additional 15% tax on top of the marginal tax rates, you have to find ways to create passive income and keep your pension wealth intact.

The solutions

You can offset the OAS clawback or tax deductions by earning extra income. CT REIT (TSX:CRT.UN) and Northview Apartment (TSX:NVU.UN) are real estate investment trusts (REITs) known for being dependable passive-income providers.

CT stock, for instance, pays 4.99% dividend, while Northview’s yield is 5.65%. With both REIT stocks paying higher-than-average dividends, you can negate the effects of the OAS clawback and have a hedge against inflation at the same time.

CT is a $3.42 billion REIT that has one of the most rock-solid retail real estate portfolios. Its assets consist of 325 income-producing, top-quality commercial and residential properties across Canada. More so, the controlling unitholder and most significant tenant of CT is Canadian Tire, which is a leading brand in the country.

The close association of the two entities is a significant advantage. CT gets insight from Canadian Tire when pursuing potential real estate acquisitions and development opportunities. From there, CT establishes long-term, escalating leases position to ensure robust growth.

Northview can turn you from a prolific saver to a smart investor. You don’t need a huge capital to start. If you can make it a habit to save every month, you can purchase this REIT stock for less than $30 per share.

Assuming you have $100,000 savings today and invest in Northview, you’ll be receiving $470.03 monthly. You can save more and then reinvest the dividends to maximize the compounding effect. The old and wise investor has been using this strategy to make good money.

Your advantage in Northview is that it addresses the residential needs of people in eight provinces and two territories of Canada. Most notable are the locations of its 27,000 residential units. The leasable properties of Northview are in areas with expanding populations and growing economies.

The primary goal of this REIT is to deliver stable and growing profitability and distributions to investors over time.

Time to claw back

Why do you have to allow the OAS clawback to diminish your pension wealth? You can claw back too and recover the deductions by earning reliable and growing passive REIT income from CT REIT and Northview Apartment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

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