Make the most of this wealth-creation tool all year
Many investors only think about their Registered Retirement Savings Plan (RRSP) in February. But that’s really just a conditioned reflex, spurred on by financial institutions to get you to give them money in the first 60 days of each year. Any contribution made within those 60 days can be applied to the previous year and is deductible from your previous year’s income. That’s all well and good, but your RRSP really needs more attention than a panicky annual deposit just before the deadline.
Professionals, executives, business owners can benefit
The defined benefit pension plan has pretty much gone the way of the dodo. With one exception: the Individual Pension Plan (IPP). If you’re a business owner or executive, or an incorporated professional, such as a physician, dentist, lawyer, accountant, and so on, and you are over age 40 in your peak earning years, you might consider an IPP. Its many advantages for people in this group certainly outweigh its drawbacks. And as tighter rules for passive investments in private corporations have limited the availability of the small business tax rate, an IPP offers some business tax advantages as well.
Robyn Thompson is featured in The Globe and Mail’s “Financial Facelift” series by Diane Maley. Mark and Meredith are well positioned financially with robust cash flow, and want to retire, but they still have mortgages on rental properties. Should they pay off the mortgages as fast as possible? Read Robyn Thompson’s advice on why that might not be the best idea for the couple at this point in their lives.
Coping with withdrawal risks and benefiting from RRIF rule changes
The onset of the COVID-19 pandemic has thrown many retirement plans into disarray. The collapse of the stock market in March, volatility in bond prices, the crash of energy markets, and the shutdown of virtually all economic activity naturally is causing a great deal of anxiety for those who were planning for retirement this year. But even now, there are financial strategies for pre-retirees and those in the early phases of retirement that can help protect your nest-egg and secure your income streams.
There are flexible alternatives to conventional pension plans for both employers and employees. For employers, offering a Group Registered Retirement Savings Plan (RRSP) as a benefit can be more attractive to potential employees than a registered pension plan. And for business owners, executives, and professionals, an Individual Pension Plan (IPP) can offer enhanced retirement savings over and above an RRSP. READ MORE
This year, the RRSP contribution deadline for getting a 2018 tax deduction is March 1. You still have four weeks to make a contribution, and that’s plenty of time to discuss the best strategy with your financial advisor. To make sure you get the most benefit from your RRSP, there are six key rules that apply all the time, and that I advise my clients follow. READ MORE
Let’s say you’ve accumulated a nest egg of $1 million at age 65, through pension plans, perhaps a significant RRSP, TFSA contributions, some inheritances, and possibly some money left over from downsizing your home. You’re ready to retire, and you have to decide what to do with it to make it last through retirement. Here’s what you need to know. READ MORE
It’s sometimes said that you need at least a $1 million retirement fund to maintain the kind of lifestyle you want after age 65. But starting at, say, age 40, can that even be done? The good news is that it is possible to build a million-dollar retirement fund. But there five important principles you have to follow. READ MORE