The most important word in the financial dictionary: Retirement.
This is the time of the year when we focus our attention on RRSPs, both for the tax break they create and hopefully for another deposit to our personal Heritage Fund for our future.
Beyond the media deluge about RRSP contributions a different message is developing this year. That message is: “Canadians are not saving enough to protect their lifestyle expectations in retirement”.
The good news is that the financial services industry has developed many ways to help start building a significant pool of savings that will generate the income you need.
• RRSPs – for the majority of Canadians who do not have a Defined Benefit Pension Plan this is the first line of defence.
• Defined Contribution Pension Plans – although these plans do not have guaranteed income, please take advantage of any plans provided by your employer.
• Group RRSPs – another great way to save, especially if there is a matching program.
• TFSAs – introduced in 2008 Tax Free Savings Accounts are available for deposits up to $25,500 per person (cumulative) and are becoming a significant part of the investment plan.
•Non-Registered Investing – there are a number of “tax effective” investment strategies that can reduce taxable income with a minimum impact on the real income you receive.
• GMWBs / GLWBs – these plans are provided by the insurance industry and can be an excellent way to provide lifelong income.
• Whole Life Insurance – if you have an investment time horizon of 20 years of more this is a guaranteed way to build up significant savings for retirement income.
• Corporate Retirement Income Plans – if you own a company and are building surplus retained earnings or cash to invest, there are many strategies that can enhance your retirement plans.
• Remuneration Planning for Small Business Owners - also, for high earning business earners and professionals, RRSPs may no longer be the most beneficial way to build retirement assets.
