SMART RETIRE PLANNING

Don’t just look into your future,dive in!

Canadians realize that without adequate financial planning they may not be in a position to secure in their retirement years. And most of us don’t plan or think that way, unfortunately.

At Smart Advice for Life, we help you regain that courage to think about your future and act accordingly. We provide mental stability through an advice that fits best in your current lifestyle.

 

How RRSPs works?

A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government that you use to save for retirement. RRSPs have special tax advantages, which are;

  • Tax-deductible contributions – You get immediate tax relief by deducting your RRSP contributions from your income each year. Effectively, your contributions are made with pre-tax dollars.
  • Tax-sheltered earnings – The money you make on your RRSP investments is not taxed as long as it stays in the plan.
  • Tax deferral – You’ll pay tax on your RRSP savings when you withdraw them from the plan. That includes both your investment earnings and your contributions.

How much you can contribute?

Anyone who files an income tax return and has earned income can open and contribute to an RRSP. There are limits on how much you can contribute to an RRSP each year. You can contribute the lower of:

  • 18% of your earned income in the previous year, or
  • the maximum contribution amount for the current tax year: $23,820 for 2013.

If you are a member of a pension plan, your pension adjustment will reduce the amount you can contribute to your RRSP.

How long your RRSP can stay open?

You must close your RRSP in the year you turn 71. You can withdraw your RRSP savings in cash, convert your RRSP to a RRIF or buy an annuity.

Guaranteed Minimum Withdrawal Benefits also sometimes known as GLIBs – Guaranteed Living Income Benefits – can guarantee an income that lasts for life while at the same time provides liquidity and access to asset allocation. Products that feature a GMWB can also protect your retirement income from market downturns and potentially increase if the markets perform well.

To learn more about guaranteed lifetime income with potential increase in the markets, contact Smart Advice to assist you.

A Registered Retirement Savings Plan or RRSP is a type of Canadian account for holding savings and investment assets. Introduced in 1957, the RRSP’s purpose is to promote savings for retirement by employees. It must comply with a variety of restrictions stipulated in the Canadian Income Tax Act. Rules determine the maximum contributions, the timing of contributions, the claiming of the contribution tax credit, the assets allowed, and the eventual conversion to an RRIF (Registered Retirement Income Fund) in retirement. Smart Advice can offer access to RRSP’s in the form of guaranteed investment certificates (GICs) and segregated funds.

 

Types of RRSPs

RRSP accounts can be setup with either one or two associated individuals:

 

Individual RRSP

An individual RRSP is associated with only a single individual termed an account holder. With an individual RRSP the account holder is also called a contributor, as only they contribute money to their RRSP.

 

Spousal RRSP

A Spousal RRSP allows a higher earner, termed a spousal contributor to contribute to an RRSP in the spouse’s name. In this case it is the spouse who is the account holder. The spouse can withdraw the funds, after a holding period. A spousal RRSP is a means of splitting income in retirement. By dividing investment properties between both spouses each spouse will receive half the income, and as a result the marginal tax rate will be lower than if one spouse earned all of the income.

 

Group RRSP

In a group RRSP the employer arranges for employees to make contributions as they wish through a schedule of regular payroll deductions. The employee can decide the size of contribution per year and the employer will deduct an amount accordingly and submit it to the investment manager selected to administer the group account. The contribution is then deposited into the employee’s individual account and invested as specified. The primary difference with a group plan is that the contributor realizes the tax savings immediately, instead of having to wait until the end of the tax year.

 

Contributing

A RRSP deduction limit is the maximum amount of RRSP contributions that can be claimed on a tax return for a given tax year.

A deduction limit is calculated as the unused deduction limit from the prior year, plus 18% of a person’s earned income from the previous calendar year up to a specified maximum, less any pension adjustment (PA) and past service pension adjustment (PSPA), plus pension adjustment reversals (PAR).

Should you wish to learn more about our carriers and business partners, who offer these products, please contact Smart Advice today.

A Group Registered Savings Plan (Group RSP) can provide retirement savings solutions that can build employee loyalty, at no added administration cost to the employer.

Employees that participate in a Group RSP have an easy way to save for their retirement through payroll contributions of as little as $30 a month. You can enjoy an immediate tax benefit since your RSP contributions can be made before any tax is deducted from your pay. The tax-deductible contributions accumulate in a tax-sheltered fund. The amounts invested in your Group RSP are not locked in, which means they can be withdrawn at any time. In addition, employees make their own investment decisions.

You can also capitalize on the purchasing power of a group and have access to the group’s financial professional to build a personalized investment strategy.

Let us help you! Contact Smart Advice for further details and to set up your Group RSP today.