| Glossary of
Financial Terms | | |
Supplemental
Employee Retirement Pension Plans (SERP)
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| Supplemental pension plans for
senior executives are becoming extremely popular. Those individuals
in the higher income brackets are not able to make the full 18% contribution
to their retirement funds because of the legislative ceiling imposed
by the RRSP and pension limits. The SERP gives these individuals a
method of topping-up their retirement savings. |
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| RRIFing
with insurance: an Advisors point of view |
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| As the year 2005 draws to an end,
revisiting RRIFs is an excellent strategy if your in the 69 plus group.
Many individuals in this age group find that the time to roll over
their RRSPs into RRIFs is very stressful, because it means that it
is time for them to start chipping away at the capital they have spent
a life time building. They often forget that the government may be
entitled to as much as 48% of the tax savings they enjoyed (depending
on their marginal tax rate and the province of residence). |
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| LIFs,
RRIFs, and other IF's |
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| Now that LRIFs are available as
another retirement investment product, (in addition to RRSPs, RRIFs,
LIRAs, LRSPs, LIFs and DPSPs) there may be some confusion about just
which one is best for you. Here are some reminders to follow. |
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| Planning
Income Mixes for Tax-Astute Retirees |
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| Retirees can and should use the
tax system to their advantage in structuring income to preserve capital.
An important way to do this is to plan an income mix that is tax efficient.
Retirees face many tax obstacles when the income mix is wrong. Most
middle-income Canadians are subject to clawbacks on tax preferences
such as the age amount, or on social benefits like Old Age Security.
They also suffer “time value of money” problems when they
unnecessarily “pay forward” taxes on compounding annual
interest returns earned outside registered accounts and, possibly,
quarterly tax installments. |
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| Avoid
RRSP Overcontributions |
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| If you contribute more than your
contribution limit, you will be subject to a 1% penalty tax per month
to the extent that the overcontribution amount exceeds $2,000. This
penalty tax is expensive, ensuring that it is not worthwhile to make
overcontributions above this limit. |
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| Annuity
Taxation |
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| Annuities, like any other investment,
are subject to tax. The taxation of annuities will depend on the type
of funds used to purchase the annuity, and whether or not the annuity
was purchased on a tax deferred "prescribed" basis. Below
is a brief description of the different methods of annuity taxation.
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| LIFs,
RRIFs, and other IFs |
|
| Now that LRIFs are available as
another retirement investment product, in addition to RRSPs, RRIFs,
LIRAs, LRSPs, LIFs and DPSPs, there may be some confusion about just
which one is best for you. Here are some reminders to follow. |
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| Annuity
Taxation |
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| Annuities, like any other investment,
are subject to tax. The taxation of annuities will depend on the type
of funds used to purchase the annuity, and whether or not the annuity
was purchased on a tax deferred "prescribed" basis. Provided
in this article are brief descriptions of the different methods of
annuity taxation. |
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| RSP
Investing Strategies |
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| One of the best ways to maximize
your RSP contribution each year is to set aside a specific dollar
amount every month. Many people refer to this strategy as "paying
yourself first". All you have to do is set up a monthly pre-authorized
chequing plan. Your bank account will be debited on a monthly basis
and the money directed to one or more mutual funds. You will be surprised
at how quickly your retirement nest-egg starts accumulating. |
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| Innovative
strategies for a worry-free retirement |
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| Recent market volatility and lowering
interest rates may be making some retired investors concerned about
the future of their retirement income. Through innovative annuity
strategies, you can receive a more worry-free retirement that includes
a guaranteed income stream. |
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| Is
the RRSP dead? |
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| With the recent reduction of the
capital gains inclusion rate to 50 percent from 75 per cent, many
advisors and their clients are asking themselves the question: "Is
the RRSP dead?". |
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| Tips
and more to help you make the most of your RRSP! |
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| Investing in an RRSP is one of
the most important investments you can make. As a general rule, it
is never to early to plan for a successful retirement and as long
as you have not reached retirement age, it is never to late to start
to save. |
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| Registered
Retirement Savings Plans: More than just a tax break |
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| Registered Retirement Savings
Plans (RRSPs) are well known for their ability to provide an immediate
tax deduction but they are also popular for their longer-term benefits,
being the investment of choice for those looking to save money for
their retirement. |
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| RRIF -
Registered Retirement Income Funds |
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| For those who have invested money
in an RRSP, the year you turn 71 is a very important one. A major
decision awaits you as you must either cash in your RRSP or convert
it to a post-RRSP plan such as a Life Annuity or RRIF. Fortunately,
for those who would like to retain control over their investment,
the choice gets easier. |
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| Calculating
your retirement needs |
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| An important step in retirement
planning is calculating how much money you will need to continue to
live comfortably in the years after you retire. Although the final
total may seem excessive right now, it pays to keep in mind the fact
that these savings represents your income over the span of your retirement.
How much income will you need to retire and how do you plan to save
it? |
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| Factors
to weigh when choosing your RRSP investments |
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| Choosing RRSP investments can
be difficult and is not something that should ever be taken lightly.
But with so many products available, how do you know what is right
for you? With each company promoting their product as "the best
one for you", it can be hard to know where to look, but the answer
lies with you. Make the right choice by answering a few simple questions. |
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| RRSP
contribution or mortgage repayment? |
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| When it comes to making a decision
between making an RRSP contribution or paying down a mortgage, there
is no easy answer. On one hand, we all know the importance of starting
early to save for retirement but it can also be tempting to eliminate
the mortgage debt, which is the largest debt that most of us will
ever incur. The solution: Combine the two for the best of both worlds. |
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| Women
and RRSPs: Just do it! |
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| With the dawning of a new millennium,
the days of a women depending on her spouse or the government for
retirement provisions are long gone. In today's society, where women
often view marriage as an option rather than a necessity, most women
accept the responsibility of maintaining and planning for their own
financial future. |
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| Where
retirement is concerned, borrow for tomorrow |
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| When planning for retirement,
the perfect scenario involves us starting our RRSP contributions at
an early age and investing the maximum allowable each year. Unfortunately,
reality has a way of intruding, making maximum annual contributions
unlikely if not impossible. If this sounds like you, look into borrowing
to make RRSP contributions and plan for a secure financial future. |
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| Why RRSPs
should be the cornerstone of your portfolio |
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| In addition to being known as
a great way to save for retirement, RRSPs are also one of the most
useful tax shelters available to Canadians today. Since retirement
planning and tax savings are important to almost everyone, it makes
sense to make RRSPs the cornerstone of your investment portfolio. |
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