Investment & Retirement Planning are the most important actions that you can take to secure a comfortable future for yourself and your family. Most clients are planning for retirement and putting their savings toward that goal however there can be other goals clients save for including buying their first home, post-secondary education, emergency savings, and so on.
We offer different types of savings plans and work with our clients to determine which of these vehicles best suit their needs and goals.
The types of savings plan we offer include:
- Retirement Savings Plans (RSP)/Retirement Income Fund (RIF)
- Locked-In Registered Account (LIRA)/Locked-In Income Fund (LIF)
- Tax- Free Savings Accounts (TFSA)
- Registered Education Savings Plans (RESP)
- Registered Disability Savings Plans (RDSP)
The RSP account allows you to focus on saving for retirement by allowing for a certain amount each year to be deposited. Over time, the account grows and eventually is turned into a RIF account to provide a systematic monthly income throughout retirement.
Contributions to an RSP account are tax-deductible and the money within the plan accumulates on a tax-deferred basis. The overall objective of the RSP account is to defer taxes when you are earning income during your working years and then to draw income when you retire and on a reduced income.
The Federal Government has established a First-Time Homebuyer’s Plan available for RSP Account holders which allows them to withdraw up to $35,000 to put toward the purchase of their first home – with the money then being repaid over the next 15 years.
Generally, those working for an employer also enjoy the benefits of participating in a Group Pension or Group RSP plan. Should you choose to leave your employer, you can choose to leave your account invested at the company handling the group plan or, you may transfer your account out into a Locked-In Account managed by an independent advisor, such as our firm.
The money must stay locked-in and cannot be accessed until at least age 55 and once ready to commence receiving an income, the account is transferred to a LIF account.
When clients are changing their employer, we strongly recommend moving their pension to a LIRA account to take advantage of active management.
Tax Free Savings Account (TFSA):
The TFSA program was initially introduced in 2009 by the Federal Government to provide a vehicle separate from the RSP program that would encourage Canadians to save for their future. The annual allowable annual contribution limit is set in December of the preceding year and any unused room can be carried forward to future years. We recommend this plan to all of our clients to take advantage of the tax-free growth and also the tax-free withdrawals when/if they require money. A fully funded TFSA program also provides additional tax-free cash flow throughout retirement.
College and University programs have become more important than ever for our children to be successful. Yet, the cost of post-secondary schooling continues to grow annually. In 2020, the average cost of tuition to attend a Canadian undergraduate program was $6,463 and is expected to reach approximately $12,000 by 2038. You then add the cost of books, food and board, and transportation to name a few additional expenses which all add up to an expensive education.
A Registered Education Savings Plan is an investment account designed for Canadians to save for post-secondary education, whether that be University or College. The plan is available to those under the age of 17 and is available to use toward school related costs until the age of 35.
To further encourage saving, there is a federal government grant applied to certain contributions into the plan.
The RDSP is a long-term savings plan to help Canadians with severe disabilities and their families save for the future. While the contributions to the plan are not tax-deductible, the account grows on a tax-deferred basis. There is also a government grant applied to certain contributions into the plan.
Whether you have already established a savings program or are just beginning, it’s never too late to start saving!
We encourage all clients register for CRA My Account Online to view their allowable annual RRSP and TFSA contribution limits.