Retirement Planning – Randy Reynolds FAB Planning

Supporting adult children takes its toll on boomers’ retirement plans: survey

import Feb 13, 2017

As baby boomers approach retirement while their children look for financial help, many are feeling the financial strain.

A new TD survey found 62 per cent of boomers can’t save enough for retirement because they’re supporting adult children or grandchildren. Those kids, however, aren’t taking that money obliviously: 44 per cent of millennials who rely on their parents’ or grandparents’ support said they know that help means fewer retirement savings, and 43 per cent said they’d cut costs rather than asking for financial help.

Read: Canadians postpone retirement to support children

“As a parent or grandparent it’s natural to want to help our kids and grandkids who may be facing financial challenges such as finding full-time employment or paying their day-to-day expenses,” Rowena Chan, senior vice-president at TD Wealth Financial Planning, said in a news release. “It’s important that this desire to help is balanced with the goals you have when it comes to retirement.”

Retirement – Are you Prepared?

import Jan 23, 2017

Whether you are decades away from retirement or if it is just around the corner, being aware of the planning opportunities will take the fear and uncertainty out of this major life event.

Blue sky your retirement plans to get clarity

As you approach retirement, preparation and planning become extremely important to help ensure that this period of your life will be as comfortable as possible. If you are like most, you have spent considerable time contemplating the type of retirement you wish for yourself.

Is extensive travel your dream?
Do you have an expensive hobby or two you want to take up?
Will you stop working totally or continue to do some work on your own terms using your life experience and skills to supplement your income.
Will you remain in your house or will you downsize to smaller, easier to care for premises? Or perhaps housing that will be more compatible with the challenges of aging?

The Single Premium Insured Annuity

import Aug 22, 2016

Available until January 1, 2017

A New Approach

A new method of structuring an insured annuity has restored its favourable results. The new approach involves combining the prescribed annuity with a Universal Life policy.

The UL policy is funded with a single deposit to provide lifetime coverage.
The remaining capital is then used to purchase the prescribed life annuity.
On the death of the insured/annuitant, the annuity income ceases
The Universal Life policy now returns the full amount of the capital to the intended beneficiaries.

Canada Pension Plan – Should You Take it Early?

import Apr 18, 2016

The new rules governing CPP were introduced in 2012 and they take full effect in 2016. The earliest you can take your CPP Pension is age 60, the latest is 70. The standard question regarding CPP remains the same – should I take it early or wait?

While you can elect to start receiving CPP at age 60, the discount rate under the new rules has increased. Starting in 2016, your CPP income will be reduced by 0.6% each month you receive your benefit prior to age 65. In other words, electing to take your CPP at age 60 will provide an income of 36% less than if you waited until age 65.

CPP benefits may also be delayed until age 70 so conversely, as of 2016, delaying your CPP benefits after age 65 will result in an increased income of 0.7% for each month of deferral. At age 70, the retiree would have additional monthly income of 42% over that what he or she would have had at 65 and approximately 120% more than taking the benefit at age 60. The question now becomes, “how long do you think you will live?”

Budget 2015 Highlights

import May 18, 2015

On April 21, 2015, Finance Minister Joe Oliver tabled his first federal budget. The provisions of the budget will be of particular interest to owners of small and medium sized businesses, seniors and families with children. As well, those looking to make certain charitable donations will be encouraged by Oliver’s budget.

Below is a brief commentary on each of the key budget proposals.

For Seniors and Savers

Increase in Tax Free Savings Account (TFSA) Limit

Effective January 1, 2015 the annual contribution limit has been increased from $5,500 to $10,000;
As a consequence, the automatic indexing of the annual contribution limit has been eliminated;
On April 24, the CRA announced that even though this provision is not law as yet, they will allow increased deposits to a TFSA effective immediately.

Make the Most of Your Registered Retirement Savings Plan

import Feb 10, 2015

The 2014 Registered Retirement Savings Plan (RRSP) contribution deadline is Monday, March 2, 2015. Here are some facts about RRSPs to help you make the most of this great opportunity to grow your retirement savings, better plan your personal taxes, and enjoy a comfortable retirement.

Make your maximum contribution

Your RRSP contributions provide a deduction from your taxable income, which for most, results in a tax refund when you file your personal tax return.

For 2014, you can contribute a maximum of 18% of your earned income in 2013, to a maximum of $24,270. Refer to your 2013 notice of assessment as you may have additional unused carry forward limit.

This number will be adjusted if you are a member of pension plans and/or profit sharing plans, depending on the value of your benefits in the previous year.

Making the maximum contribution at the beginning of each year will add additional compounding power to your RRSP.

TFSA or RRSP?

import Feb 25, 2013

Lately, one question clients are asking me is whether they should contribute to a Tax Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP)? Personally, I really like the TFSA. however it doesn’t have to be an either or choice. Why not do both? If both, in what proportion should you divide your contributions? In order to make an informed decision, let’s quickly review the main features of each program as discussed in last month’s article. I will use bullets to illustrate the features as nothing gets people’s attention more than bullets.

TAX FREE SAVINGS ACCOUNT

Any Canadian resident age 18 or over may open a TFSA. Contribution is not based on earned income. There is no maximum age for contribution.
Maximum contribution is $5,000 for each year from 2009 to 2012 and must be made by December 31^st of the year of contribution. For 2013, due to indexing the maximum contribution is $5,500.
There is carry forward room for each year in which the maximum contribution was not made.
The deposit is not tax deductible, but the funds accumulate with no income tax payable on growth.
Withdrawals may be made at any time on an income tax free basis. Withdrawals create additional deposit room commencing in the year after withdrawal.

Got an RSP and Turning 71?

import Dec 11, 2012

If you have been accumulating wealth in a Registered Savings Plan and are turning 71 this year or next, you should be aware of the decisions you have to make. The Income Tax Act says that you have to terminate your RSP’s by December 31st in the year you turn age 71. In doing so, you basically have three options:

1. You can withdraw all the funds in your RSP in one lump sum. Unless you have a negligible amount in your registered plan this is not a good option. It kind of defeats the whole plan in having an RSP in the first place.
2. You can transfer the balance of your Registered Savings Plan into a Retirement Income Fund (RIF). This is a simple process involving the transfer of the assets. You can keep the same investments you had before the transfer and nothing really changes except for the fact you will now be drawing income from the RIF, but the remaining funds will continue to accumulate tax-deferred.
3. You can use all or part of your RSP funds to purchase a life or term certain to age 90 annuity. Partial use would give you a combination of a RIF and an annuity providing you retirement income.

There are also three factors that should be taken into consideration in the year you turn 71: