Retirement Funding & RRSP's

It is very clear that in the near future, most Canadians will not be able to rely on company or government pension plans to provide them with adequate retirement income. Company sponsored pension plans are enjoyed by less than half of all Canadians and the viability of the Canada Pension Plan is debatable. This combined with longer life expectancies and the dream of early retirement means that many Canadians now fear running out of money before they run out of retirement. Individuals are left with only one solution — Maximize private pension plans and other investments.

RRSPs

Established by the federal government in 1957 to encourage Canadians to save for retirement, a Registered Retirement Savings Plan (RRSP) is simply an account which is registered with Revenue Canada. In addition to being the vehicle through which you can establish your own "private pension" plan for security in retirement years, the RRSP is by far the most popular tax shelter available today. RRSPs have the ability to provide immediate tax savings to anyone with taxable earned income - The higher your income, the greater your tax savings.

There are basically three ways you benefit from making an RRSP contribution:

Tax Deferral
Any returns generated within an RRSP are tax-free as long as they remain inside the RRSP. As money is withdrawn, it becomes taxable income for that taxation year. An RRSP allows you to save tax dollars when you are paying high rates of tax in your earning years or during years of high income. You can benefit from the investment and potential growth of those dollars, and receive them back during low income years or during retirement when your income tax rate is likely to be much lower.

Immediate Tax Savings
All money that is invested, up to an annual limit, is deductible from earned income for tax purposes. For every $1,000 contributed to your RRSP, there is approximate a $270 to $530 tax saving, depending on your marginal tax bracket.

Tax-Free Compounding Of Returns Within Your RRSP
Investors have the benefit of compounding on their contributions to an RRSP. No taxes at all are paid to contributions to the fund, on its reinvested income, or its capital gains. Thus, over a period of years, compounding can be a major factor in the growth of a plan.

TAKING CHARGE OF YOUR RRSP AND YOUR FUTURE

Millions of dollars are spent each year to remind Canadians to make their RRSP deposit before the annual contribution deadline. Unfortunately, many individuals stop their planning at that point and simply leave their investments at whatever institution is most handy - usually their bank.

Consulting with your Canfin Financial Advisor is the first step in taking control of your RRSP and your future. He or she can assist you in determining where and how to invest. Whatever your choice - mutual funds, bonds, or other vehicles - the important thing is that you can choose those investments that are convenient. maximize your potential for investment return, and meet your individual requirements for safety, liquidity and diversification.

WE’RE HERE TO HELP YOU

Discuss your retirement planning strategy with your Canfin Financial Advisor. He or she will be able to suggest strategies for maximizing the value of your retirement nest egg while minimizing your tax burden.