Perhaps you’re setting money aside for a dream vacation. Maybe you’re saving for a new home or trying to fund you child’s college or university education. Or possibly you’re looking to buy a cottage or you want to plan for retirement.
Your Investment Advisor understands that ‘life happens’. So, no matter what stage you are in life, your Investment Advisor can help create and maintain a plan that will meet your financial needs for today, tomorrow and in the future.
Saving for Retirement
After a lifetime of hard work, retirement is the chance for you to reward yourself. So, whether your dream is traveling the world, relax playing golf or spending more time with family, you want to make sure that you save enough to enjoy that lifestyle.
But how much do you need to retire? The question is more complex than it seems, especially when you consider your other financial obligations, such as daily living expenses, car payments, paying off your mortgage and funding your child’s education. For some, putting all these pieces together can be daunting.
As part of your retirement planning, Your Investment Advisor will examine how you can you benefit from registered savings plans such as Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) and whether you are currently getting the most out of these plans.
Contributions into an RRSP can help reduce your taxable income. Also, you don’t pay taxes on any income you earn on your contributions, until you withdraw money from the plan. That’s also where your RRIF will take over.
Once you’ve reached your goal of retirement, your RRIF acts like your RRSP, but in reverse. Instead of contributing into the registered plan, you now take the money out.
Meanwhile, any income that continues to be generated within the plan, you still don’t pay any taxes. You’re only taxed on the money that’s withdrawn. But once retired, your income is generally lower, so you pay less tax on the money you take out.
Funding your Child’s Education
Whether your child dreams of being a doctor, scientist, architect or the CEO of a successful company, you want to help your child achieve that dream. And you also want to make sure nothing stands in the way, including finances.
Funding your child’s education is one of the most valuable gifts you can give. The benefits of a college or university education will last a lifetime. Unfortunately, it’s also one of the most expensive.
The cost of tuition and other expenses related to post-secondary studies (such as books, supplies and accommodations) continues to rise. Although costs may vary by program, school and province, the cost is estimated to reach over $110,000* for an average four-year Bachelor of Arts degree by the year 2027.
If you’re overwhelmed by this figure, you’re not alone. Saving early, careful planning and with help from your Investment Advisors, this future cost can become manageable.
An RESP allows the growth income earned on contributions to remain tax deferred until your child enters a post-secondary program (within 35 years) and the money is withdrawn. In addition, your child can be eligible for government grants up to $9,200.
Taxes are paid by the student when money is withdrawn to pay for education costs. Since most students have little or no income, the student pays little or no income tax. RESPs can fund most full-time or part-time trade, college or university as long as government requirements are met.
“Education Cost Calculator”, CanLearn website (www.canlearn.ca), Canadian Student Loans Program Directorate, Human Resources and Skills Development. (calculation projects the average cost for an undergraduate student attending the University of Trent and assumes 3.0% annual inflation per year from 2009).
Maximizing your Retirement Income
When you’ve finally reached you goal, your may be tempted to cash in (deregister) the entire RRSP and splurge on yourself.
There’s nothing wrong with rewarding yourself for a lifetime of saving and hard work. But withdrawing all your savings at once will result in the entire amount being taxed. So with substantial savings, your withdrawal will be taxed at the highest rate.
Remember that these savings are going to support you throughout your retirement, not just the beginning of it. So you need to make sure that it can last.
While most of us dream of retiring early, delaying retirement can help maximize tax-deferred growth. In addition, minimizing the amount withdrawn from your RRIF can keep that growth working for you.
Estate and Trust Planning
Thinking about what happens to your family and other loved ones when you pass away is something that you’ve probably tried to avoid. And, you’re not alone. But planning for this eventuality will help secure their financial future and reduce their anxiety during this emotional time.
This could include: arranging for charitable donations and other gifts, ensuring funds to pay bills, protecting your asset from creditors, securing the survival of a family business.
More importantly, they can also help ensure that as much of your wealth is transferred to your heirs by minimizing income taxes and probate costs. Otherwise, without this planning, Canada Customs and Revenue Agency could claim up to half the value of your estate.
I want to preserve my wealth
Withdrawing capital from your portfolio as well as taxes and inflation can over time substantially erode the wealth you’ve built up.
Your Investment Advisor can develop a plan that can help preserve your wealth while allowing it to grow and offset the effects of taxes and inflation. In addition, your Investment Advisor can provide investment strategies that will let you benefit from your wealth and at the same time still keep it intact.