Saving for retirement can never happen too soon. A Registered Retirement Savings Plan (RRSP) is an essential part of a rounded portfolio that ensures you have a secure financial future.
Tandia has a number of solid RRSP investment options available.
You can contribute to your RRSP at any time, but to lower your income tax for the 2022 tax year, make your contributions no later than March 1, 2023.
A RRSP allows you to invest money during your peak earning years to build up a tax sheltered retirement fund.
A RRSP plan is designed to encourage Canadians to save for their retirement.
Contributions to a RRSP are tax deductible, meaning that when you make a contribution to a RRSP, you are reducing your taxable income by the amount of money you contribute to the plan.
Each year you will receive a Notice of Assessment from the Revenue Canada. You are allowed to contribute 18% of gross income less any pension contributions to a RRSP.
With the cost of living on the rise and government support declining, it's now more important that we start taking control of our financial futures. The key to saving for retirement is simply to start doing it.
1.) Start small
Small amounts quickly add up and help build good saving habits. Think about setting up regular payroll deductions, this way the money comes directly out of your pay before you can see it or spend it.
2.) Invest early
Invest early for compound growth. Investing in your RRSP well in advance of retirement means that your money has more time to benefit from tax-sheltered growth.
3.) Do the math
We’re all living longer and our standard of living keeps rising. Take the time to figure out if your retirement savings will give you the lifestyle you want. It's important to set a goal and know how much you will need.
4.) Put your tax refund to work
As tempting as it might be to spend your tax refund, reinvesting it will work to your long-term advantage of reaching your retirement goals.
5.) Speak with a Financial Advisor
Maintaining a regular savings and budgeting plan can be difficult. Having the right support from a financial advisor can help you stay on track in meeting your retirement goals.
You want to avoid taking money from your RRSP. If you withdraw money from your RRSP while you're working you'll be highly taxed based on your marginal tax bracket because your RRSP money is considered income when you withdraw it. The idea of an RRSP is to withdrawal these funds in your retirement years slowly when your tax rate is typically lower.
There are some special exceptions for when you can take money out of your RRSP such as buying your first home or going back to school. However, keep in mind - you do have to pay the money back into your RRSP - otherwise you'll end up being taxed.
Registered Retirement Income Funds (RRIFs) are a popular form of retirement income. While you do not contribute directly to a RRIF, funds can be transferred from a RRSP, another RRIF, a Registered Pension Plan, or a commuted RRSP annuity.
At age 71, all RRSP investments must be converted to a RRIF or annuity, or cashed out.
RRIFs are similar to a RRSP with the exception that you must take some taxable payments from your RRIF on an annual basis. You choose the payment level as long as it meets the minimum levels set out by the government.
At Tandia Financial Credit Union, eligible deposits in registered accounts have unlimited coverage through the Financial Services Regulatory Authority (FSRA).
An RRSP helps you save for retirement through annual contributions, a RRIF helps fund your retirement through annual withdrawals.
You can convert your RRSP to a RRIF at any time before the end of the year in which you turn 71. You’re required to start drawing RRIF income by the end of the calendar year in which you turn 72.
For maximum tax deferral benefits, you want to withdraw as little as possible from your RRIF for as long as possible. Withdrawing only the mandatory minimum amount from your RRIF allows your funds the opportunity to increase in value and last longer.
You can choose to take a lump sum from your RRIF each year, but it’s not the only option: you can choose any schedule that's right for you – weekly, monthly, quarterly or yearly.
Even if you don’t need your RRIF income immediately, it’s important to plan ahead and maximize your withdrawals so you don’t pay more tax than you need to.
Contact or book an appointment with one of our Financial Advisors. Let us help you set up a retirement plan that works for you.
Your taxable income (including RRIF withdrawals) can impact your eligibility for certain government benefits, such as Old Age Security. Too much income could mean a reduction of some of these benefits, so be sure to carefully plan the timing and amount of your RRIF withdrawals.
If you don't need the money from your mandatory RRIF withdrawal, and have contribution room, deposit the funds in your tax-free savings account (TFSA). Inside the TFSA they will grow tax-free, and all withdrawals are tax-free.
A beneficiary will not have to pay tax on any amount paid out of the RRIF if it can reasonably be regarded as having been included in the deceased annuitant's income.
You'll receive a T4RIF slip if you received payments from your Registered Retirement Income Fund (RRIF) during the year.
Our Retirement Planner Calculator determines the amount of savings that you'll need to retire comfortably. By flagging any shortfalls or surpluses, the Calculator outlines the savings required to reach your financial goals for retirement. Visit a branch, book an appointment or call our Members Solution Centre at 1-800-598-2891.
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