Tag Archives: RRSPs

16 Financial Habits for a Prosperous New Year

Posted By Financial Independence Hub | January 5, 2016

By Marie Engen, Boomer & Echo

Special to the Financial Independence Hub

A Fidelity Investments study discovered that setting specific financial goals does help get your fiscal house in order. 56% of those surveyed said their finances had improved, a much better result than most New Year’s resolutions.

Give yourself a financial checkup and see where you can improve your savings and spending habits.

Increase your savings. Save 16% more than you would normally on all your savings, including your employee pension if you are not contributing the maximum amount already. By making modest adjustments, you won’t miss the money as much.

Automate your savings. One of the easiest and most effective ways to save is to automate the process, and yet less than 40% use this technique. Set up regular transfers with your bank. Some employers will take money directly of your paycheque to invest in RRSPs, Canada Savings Bonds and other savings vehicles. Set up savings for specific expenses such as a new car, home renovations and vacations, as well as children’s education and retirement savings.

Incorporated? Don’t overlook TFSAs & RRSPs if your time horizon is long enough

Posted By Financial Independence Hub | September 9, 2015

By Benjamin Felix, PWL Capital Inc.

Special to the Financial Independence Hub

When people have corporations it’s common for them to retain all earnings in excess of their living expenses inside of their corporations to avoid paying personal tax.

This seems logical. By leaving the money in the corporation there is more money to invest in the corporate investment account, and we know that about $50,000 of dividends can be taken out of a corporation nearly tax-free, making the idea of leaving everything in the corporation until it’s time to draw a conservative retirement income appear very attractive. This strategy may have also been motivated by the tax advantage that used to exist for taking a dividend-only income.

Shift to mix of salaries & dividends

Ottawa starts consultations on voluntary CPP

Posted By Financial Independence Hub | August 28, 2015

By Jean-Pierre Laporte

Special to the Financial Independence Hub

The Federal Government has started consultations on its newest retirement savings concept: allowing individuals to make voluntary contributions to the Canada Pension Plan.

While details are sketchy, it would appear that basic agreed-upon concepts mean contributions would be voluntary and that employers would not be forced to make or match contributions.

While the Federal Government made it clear that it would not let the Canada Revenue Agency be used by the Ontario Retirement Pension Plan proposed by Premier (Kathleen) Wynne, presumably a voluntary CPP would allow use of the existing machinery to collect these new savings.

The core design issue rests with the form of benefit that this voluntary plan would offer: defined benefit or defined contribution?

If the goal here is to create a supplement to the current CPP benefit, presumably contributions would have to be locked in, and without member investment directions.

The mechanism to convert the fixed defined contributions coming into the supplemental CPP account into defined benefits would have to rely on partial deferred annuities, or self-annuitization.

This would distinguish the Supplemental CPP from an RRSP or TFSA.

No fiduciary responsibilities for employers

Investor Toolkit: The right way to calculate your retirement income

Posted By Financial Independence Hub | August 28, 2015

By Patrick McKeough, TSInetwork.ca

Special to the Financial Independence Hub

Tip of the week: “When you work out a plan for your retirement, make sure that you aren’t basing your future income on over-optimistic calculations that will end up leaving you short.”

Every year as RRSP season heats up, many investors are confident they are taking concrete steps toward a secure retirement. But are those steps based on realistic calculations?

Let’s say you’re 50 and you want to retire at 65. You have $200,000 in your RRSP, and you expect to add $15,000 in each of the next 15 years. To determine if this is enough to retire on, you need to make assumptions about investment returns and income needs.

• What you can expect

Long-term studies show that the stock market as a whole generally produces total pre-tax annual returns of 8% to 10%, or around 6% after inflation. For purposes of this retirement plan, we’ll assume a 6% yearly return, and disregard inflation. Continue Reading…

7th Eternal Truth: Don’t say no to free money from the Government

Posted By Jonathan Chevreau | June 30, 2015

Today in the Financial Post and online are the seventh and final installment of my series on the 7 Eternal Truths of Personal Finance. The headline and online link is Eternal Truth No. 7: Don’t say no to the few offers of free money from Ottawa.

That applies to Washington to, of course! Either way, and as the article points out, truly free money from Government is a rare thing, since money is really flowing in the opposite direction in the form of taxes.

Still, there are ways to minimize the tax burden in either country, and you shouldn’t say no to them when they’re on offer.

Here’s a summary of the entire series, with links to each of the seven Truths.