Archives > March 2015

Give Yourself a Raise!

Many Canadians are pleased to receive a tax refund each spring, but what if you had that money to spend each month when you really needed it and were able to contribute more to your RRSP contribution at the same time? Your employer is obligated to withhold income tax from your gross salary but you may be giving the government a free annual loan. The withholding amount may be reduced depending on the deductions and tax credits available to you. Your employer may be able to take into account your current RRSP contributions when determining your income tax withholdings if the employer makes the contributions on your behalf or with the permission of the Canada Revenue Agency (by filing a T1213). Your income tax withholdings could be reduced and your take home pay could be increased by having your employer factor in regular RRSP contributions.  For more information on this and other tax planning questions, please contact us.

What is Longevity Risk?

Longevity risk is the danger that you will outlive your money – and it is becoming a greater threat to a healthy retirement with every year that goes by. Why is longevity a threat? Because we are living longer than ever before. Since the turn of the last century, life expectancy beyond age 65 has grown from 11 to almost 20 years for men; and from 12 to 22 years for women. Under current projections, individuals nearing retirement should prepare for the possibility of living another 20 years – and conceivably much longer. That requires not only a significant amount of savings, but also an investment strategy that accounts for a retirement that could compare to a working career in length. It’s also important to understand how your needs will change over time and the funding implications of that evolution. For example, traditional retirement goals, such as travel, may need to give way to practical considerations such as funding of mobility devices and long-term care. To fully account for the impact of longevity, consider meeting with me to review these risks and your current financial plan to make sure your retirement needs will be met.

The benefits of a Group RRSP

Providing further benefit options to your employees can go a long way in showing them you value their efforts, and it can also attract skilled employees.  A Group RRSP is a low-cost, highly effective way of supporting your employees’ efforts to increase retirement savings and wealth.  As the employer, you pay no fees in establishing a Group RRSP. The plan design can accommodate any number of participants and allow for various contribution levels and different investment profiles.  Setting up a Group RRSP is very easy and simple to administer through payroll deductions.  The employee’s contribution is withheld at source as a payroll deduction. You may top up this contribution with an employer contribution based on any incentive criteria (this contribution is completely optional, but is also a deductible expense for the company). Because the contributions are made regularly, the employee receives the related income tax deduction at the time of each contribution, instead of when filing a return at tax time. This results in a tax savings on each pay-cheque, which reduces the employee’s at-source deductions. I will provide any ongoing support needed to ensure that your plan is operating efficiently. When employees join your Group RRSP, I am happy to offer free investment planning advice to help them achieve their retirement savings goals.

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