You've made it! No more work - no more worries, right?
Of course not. Whether it's taking care of business, your family, or your community, you are responsible, as you always have been. You will want to take care of your retirement income, reduce your income tax, review your financial plans, and provide for your family.
You may have come to Canada with very little, worked hard and been successful, benefited as your house increase in value, you may have a cottage to pass to the next generation.
You may have been downsized or outsourced or had health issues forcing you to retire before you were financially ready.
You may be an early Boomer, in a position to build a successful career as the economy boomed.
You may want to work part-time or seasonally as a consultant, or as you explore growing a hobby into a business, to stay challenged or sociable or just to make your savings last longer.
Whether your "Retiring" or "Re-treading", we can help you look at the various income streams from government, employer pensions, and personal savings, and help you accomplish your retirement and estate planning goals.
More and more, Canadians are needing to plan for their own retirement income. Public pensions include Canada Pension Plan and Old Age Security, which are designed to replace 25% of the average income, with the Guaranteed Income Supplement ensuring a minimum income for all. More and more employers have stepped back from providing Defined Benefit Pensions, leaving individuals to make plans on their own or with a Financial Planner.
What are you retiring to? We help you plant seeds of savings as you work, to water, weed and nourish them to grow, so that you can harvest an income in your retirement, As your trusted advisor, I help find a balance between protecting your assets and growing them. I help with tax planning, estimating retirement expenses, optimizing investments, and projecting income through your retirement. See how I can help you benefit from a well-planned retirement with this video.
Canadian Public Pensions
Almost all individuals who work in Canada contribute to the Canada Pension Plan (CPP). The CPP provides pensions and benefits when contributors retire, become disabled, or die. In retirement, you can apply for and receive a full CPP retirement pension at age 65 or receive it as early as age 60 with a reduction, or as late as age 70 with an increase. Married or common-law couples in an ongoing relationship may voluntarily share their CPP retirement pensions. If you continue to work while receiving your CPP retirement pension, your CPP contributions will go toward post-retirement benefits, which will increase your retirement income. If you become severely disabled to the extent that you cannot work at any job on a regular basis, you and your children may receive a monthly benefit. When you die, CPP survivor benefits may be paid to your estate, surviving spouse or common-law partner and children. Old Age Security is available based on Canadian residency. Find out more about Canada Pension Plan and Old Age Security here:
Old Age Security - clawbacks
This link shows the income at which OAS must be partially repaid (clawed back):
By December of the year you turn 71, you need to transfer your RRSP into either a RRIF or an annuity. After that, there is a minimum required RIF withdrawal amount. Since there was no tax on the money that went into the RRSP, the money coming out of the RIF is taxed as income. In order to facilitate the personal savings of retirees lasting longer, the federal government has reduced the minimum required RRIF withdrawals, effective 2015. Click here for existing and new RRIF minimum factors. As a Financial Planner, we can project the amounts of income you might take from your RRIF under various scenarios. If you are withdrawing more than the RRIF minimum, you may not be affected. It is a good idea to check with your Advisor to ensure that you get the RRIF income you want going forward.
Locked In Retirement Accounts (LIRA)
LIRA accounts result from transferring an employer pension into a self-directed retirement account (LIRA). LIRA portfolios fall under pension legislation,and when they are transerred to a LIF they regulate the amount and timing of withdrawals from LIRA accounts. Contact us to find out more.
House Rich - Savings Poor
The latest Manulife Bank Homeowner Debt Survey reveals many Canadians find it difficult to pay for today and plan for tomorrow. Faced with rising housing costs, homeowners struggle to balance saving, debt repayment and daily expenses. Many may arrive at retirement house-rich, but savings-poor, which could require them to make difficult decisions. Find the results of the Manulife survey here
Provide for your family; Provide estate transfer
While insurance can be used in your younger years to cover unexpected loss of income, insurance products can also provide the funding to smoothly transfer assets like a cottage or farm to your adult children. Insurance investments allow you to name beneficiaries and avoid probate. Since insurance is a complicated subject with many alternatives, we suggest you contact us for a personal needs analysis.
Be Careful with Joint Ownership
Many clients like the idea of adding adult children as joint account holders, as a convenience or to avoid estate costs. There have always been risks with this strategy:
– it can incur a taxable disposition
- tax on the account may still be attributed back to the higher-income parent
- there is a risk of loss of control of the asset
- you become exposed to creditors of your joint account holder, including marital separation disputes
Recent changes have made this strategy more risky from an estate planning view. If it is a joint account simply for convenience, disputes can arise as to whether or not the parent intended to give ownership to the joint account holder. It is important to distinguish between true joint ownership or essentially a trust where one is managing assets on behalf of the other and there is no intent to change ownership. If the joint account that is acting essentially like a trust, then the assets must flow through probate, and fees will apply.
Many clients have worked a lifetime and want your loved ones to be comfortable, but may be concerned about how fast the inheritance might disappear. This could happen for a number of reasons, if your adult child is in a poor marital situation, has a habitual spending or debt problem, or is physically or mentally incapable of managing a large portfolio. The Annuity Settlement Option is a type of structure that provides monthly income to your beneficiary over a period of time, without the costs of setting up a Trust. For those who prefer to hold onto their portfolio as long as they live, in case they should need it for their own care, but want to transfer the inheritance to their beneficiaries gradually after they're gone, read on!
Increase the funds available to your heirs
If you have savings or extra income you don’t need for lifestyle purposes, here’s information about a financial planning strategy that will increase the funds available to your heirs or favourite charity when you die. To learn more, click here or feel free to contact us.
Naming a Beneficiary
You likely know you can name a beneficiary for your RIF and TFSA accounts, but normally your non-registered accounts are taxable prior to being passed to your adult children. In particular, if you sell your home to rent in your later years, these non-registered cash proceeds can become subject to probate taxes. However, you can use Manulilfe segregated fund contracts to bypass probate and save money. When you name a beneficiary with a segregated fund contract, you can keep more of your money in your family. Find out more about the Value of Naming a Beneficiary here.
Looking for a simple and effective way to give
Whether you choose to support the causes close to your heart while you're alive or once you've gone on, it's worth it to look at the various methods of charitable giving in Canada. A Charitable Giving Fund is a donor-advised giving program that is a simple and convenient way to combine immediate tax benefits and a lasting legacy. Find out more here.
Estate Planning 10 Steps
This brochure outlines ten simple steps to estate planning.
Estate Planning Video
This video easily shows how to avoid common wealth transfer mistakes