If you've been contributing to a pension or Registered Retirement Savings Plan (RRSP) and retirement or your 71st birthday is around the corner, you're required to convert that nest egg into a Registered Retirement Income Fund (RRIF). This benefits you because an RRIF allows you to withdraw savings as income while still letting you grow your investments and minimize taxes.
When it comes to flexible investment tools, there's nothing quite like a Tax-Free Savings Account (TFSA). This registered account allows you to hold not just savings but also investment equities like stocks, bonds, mutual funds and GICs. All of your investments grow tax-free in a TFSA. What's even better? You're not taxed when you make withdrawals, and you can reinvest that amount in future years.
It appears that while many Canadians faithfully invest funds into their workplace retirement plans they are somewhat lackadaisical when it comes to determining their retirement needs as well as measuring their progress towards those needs.
In a survey conducted by Ipsos Reid in February 2015*, it was found that only 50 percent of Canadians are following a financial plan and only less than half are saving regularly for their long term retirement goals.
If any good can come from an economic downturn it is that people are forced to think more seriously about their financial success strategy. Many people affected by the economic damage wrought by the recent COVID-19 pandemic will change their financial habits by cutting back on spending, reducing debt and increasing their savings. But, for many other Canadians, life will likely continue as usual where the pursuit of an optimal life style now overshadow concerns about future financial security.
If you apply on your 60th birthday, you'll get about 36% less of the age 65 monthly pension. But, if you wait until you're 70, you'll get about 42% more. Should you hold out for the higher income, or start early?
Start early and you're sure to get it. If you wait, and die before it starts, the income you could have had is lost to you and your heirs forever.
We are all familiar with the following perennial adage: “health is wealth”. Regardless of any financial circumstances you may have, optimum health allows you to enjoy long trips overseas, partake in your grandchildren’s life, physical activities such as golf as well as looking forward to your retirement years. No one wants to have to worry about the expenses that come with health problems in retirement.
The Baby Boomers are making history as the largest retirement migration ever seen. However, it's their parents who hold the most massive accumulation of wealth which is now being transfered to future generations. Estimated to be well in excess of a trillion dollars, the traditional rules of inheritance are changing.
There are a number of common RRSP strategies that many of us use on a regular basis. These include making regular monthly deposits, borrowing to make RRSP contributions and making contributions at the beginning of the year instead of the end of the year. Here are some strategies that may get overlooked:
A survey conducted by a big bank some years ago* revealed that over 30% of Canadians were hoping for a lottery win to help fund their retirement. This raises the question, "If you were to paint a picture of your retirement, what would it look like?" Many would let dreams take over and envision lots of travel, a vacation home in an exotic location, spoiling their grandchildren, perhaps several year-long world cruises.
After spending likely 15 – 30 years focused on building an investment portfolio, it can be quite a challenge to switch gears when it comes time to withdrawing income from a retirement portfolio. This change leads to new ways of looking at investing as well as re-assessing habits that have been honed over decades.
Many retirees looking to generate income from investment assets often think that they can make withdrawals from their investment portfolio while also continuing to grow the assets over time. This is generally a tough goal to achieve.