How To Plan For Your Retirement?

How to Plan for your Retirement?

by

SJ Chartered Accountant

How to Plan for your Retirement?

The decisions you make when planning your retirement can greatly affect your quality of life throughout your retirement and the financial resources you can make available to your heirs.

Hence, it s very important to consider the proper planning of your retirement, available options of pre investing the existing savings and the time frame to decide when and how much you would be able to use it when required.

Saving for your retirement

Start planning and saving for retirement at least 15 years before you plan to retire and consider topping up your RRSP and using the tax refund to pay down your mortgage. RRSP is one of the best available retirement savings vehicles. It allows you to set aside money and to defer the taxes you would otherwise pay on it. Try to contribute as much as possible, and do so early in the year so your contribution can earn tax-sheltered income for the entire year.

Getting ready to retire

As you are close to retirement, you should update your net worth statement to get a clear picture of your potential retirement income resource. Prepare detailed cash flow forecasts to project changes in your expenses and sources of income as you get older. Reconsider your investment strategy as you are near to retirement, watch out the unintended consequences of the sale of asset, and be sure to investigate the existing death benefit and the survivors benefits available on your death. When you are assessing the various options, always remember that the longer the potential payout period, the lower the pension payment . You can receive pension benefits under defined pension plans at the same time under the same or another plan.

Be aware of government assistance for retirees :

?Canada Pension plan/Quebec Pension plan benefits.

?Old age Security benefits and the OAS claw back: delay or defer income until 2011 where possible to minimize the OAS claw back.

?Cross boarder payments of CPP/QPP, OAS and U.S social security benefits.

Pension income credit: aim for least $2000 of pension income annually for both spouses

?Pension income splitting: file a joint election to split pension income with your spouse.

?Integrating government assistance with your pension benefits.

Maturing your RRSP

Use the easiest routes for getting your money out of an RRSP.

?Top up your RRSP before the end of the year in which you turn 71.

?Withdraw the funds and pay the tax

?Convert your RRSP to RRIF or annuity at the end of the year in which you turn 71.

?Contribute excess after-tax RRIF or annuity income to your TFSA.

Cross border retirement planning

You should consider the various tax implications of country before deciding upon the retirement. The other country should be a key factor in your decision about where to retire comparing the taxation of your investment and pension income in Canada. If you have lived and worked in both countries, you may have built up retirement assets on both sides of the border.

Shailendra Jain;SJ Chartered Accountant; Serving Mississauga, Toronto, Etobicoke for Tax, Accounting, Audit and Advisory. http://www.jainfinancial.cominfo@jainfinancial.comPh: 416-622-1221

Article Source:

ArticleRich.com