Many people list retirement as their primary investment/financial objective. As such, it is a vital component of most people's wealth plans.
In the past, it was common for retirement planning to be put off until an individual started getting closer to retirement age.
With the decrease in company sponsored pension plans, and the uncertainty surrounding the future of government retirement benefits, people are now planning for retirement at a much earlier age.
Retirement planning is about setting realistic and achievable goals that allow you and your spouse the opportunity to enjoy your golden years without having to worry about how you'll meet your lifestyle financing needs.
Please contact an representative with WPG with any retirement planning questions. By considering your time horizon, helping you quantify your goals, and evaluating the risk you are willing to take with your investments, we will help you develop and implement a retirement plan that will meet your retirement objectives.
WPG offers a variety of advanced retirement planning solutions designed to meet the needs of top management/executives as well as business owners.
For many professionals, common RRSP plans are insufficient as retirement planning tools.
There are, however, many supplemental and alternative plans available to businesses to provide sufficient retirement income to their higher income earning staff. Among these products are: Retirement Compensation Arrangements (RCAs), Individual Pension Plans (IPPs), and Supplemental Executive Retirement Plans (SERPs).
Please contact your representative at WPG for further information on suitable executive retirement plans for your firm.
Registered Retirement Savings Plan (RRSP)
RRSPs are a vital part of retirement planning. Designed by the federal government as an incentive to save for retirement, RRSPs offer a wide range of investment options and saving opportunities.
RRSPs offer tax savings by allowing taxes on funds earned to be deferred until a later date when the funds are withdrawn. Further tax savings may be possible using a Spousal RRSP to split future income between yourself and a lower income earning spouse.
While designed for retirement, the government has also established programs to withdraw RRSPs to achieve other life goals, including education (Life Long Learning Pla) and home ownership (Homebuyer's Plan).
Locked-In Retirement Account (LIRA)
LIRAs are similar in design and nature to RRSP accounts. The main difference is that LIRA are designed specifically to hold locked-in pension funds of a former plan member, their spouse, or common law partner.
Pension funds transferred to a LIRA can not be cashed out, but must be used to purchase a life annuity from an insurance company, transferred to a Life Income Fund (LIF) or to a Locked-In Retirement Income Fund (LRIF) providing a pension income for life.
The LIRA owner may purchase a life annuity at any age, or transfer their pension funds to a LIF or to a LRIF at any time prior to the end of the year in which she/he turns 69 years of age.
Registered Retirement Income Fund (RRIF)
RRIFs are used at retirement to move RRSP funds into a stream of retirement income. By transferring money from your RRSP into a RRIF contract, you can begin to receive funds on a monthly or annual basis.
RRIFs have a minimum amount that must be taken out each year as established by the Canada Revenue Agency, but no maximum limit is applied to RRIFs.
It should be noted that all RRSP funds need to be transferred either to a RRIF or an annuity account by the end of the year in which the plan holder turns 69.
Locked-In Registered Retirement Income Fund (LRIF) and Life Income Fund (LIF)
Similar to RRIFs, LRIFs and LIFs are purchased with "locked-in" retirement funds such as another LIF, LIRA, or "locked-in" pension fund transfers.
LRIFs/LIFs provide the holder with an annual retirement income and have both a minimum and a maximum amount that may be withdrawn within a calendar year.
Each province has it's own pension legislation and regulations regarding transfers into LRIFs and LIFs to protect the funds from being used before retirement.
TFSAs are flexible investment accounts that allow you to contribute after-tax dollars while providing an environment for your capital to grow tax-free indefinitely.
Investment income in a TFSA (interest, dividends or capital gains) provides for tax-free compound growth, which means that your money will grow faster than in a regular savings account.
- Contributions: Annual contribution limit is $5,500, which typically increases with inflation in $500 increments and unused contribution room can be carried forward indefinitely
- Eligibility: Canadian residents over the age of 18 with a Social Insurance Number can open a TFSA
- Income Requirements: None
- Tax Benefits: While the contributions are made with after-tax dollars, all returns grow tax-free
- Withdrawals: Withdrawals are tax-free and you can re-contribute withdrawals within a calendar year without affecting your contribution limit
- Investment Options: TFSAs are extremely flexible and allow you to invest in mutual funds, stocks or bonds