Canadians, who are actively planning for their retirement, have several vehicles available to them to help grow their savings. Unfortunately, not many of us are aware of the power of retirement savings tools such as a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).
By using retirement savings accounts in combination with other strategies, our retirement planning specialists can ensure that you retire comfortably; and with a Nest Egg that’s much larger than it would grow outside of such accounts.
Why Retirement Savings Accounts are Important
Some Canadians use non-registered accounts to save for their retirement. Most other Canadians likely opt for retirement savings accounts. Why? Because they are far more efficient vehicles for saving for retirement.
While non-registered savings continue to grow each year that they are held in the respective accounts, the wonderful thing about retirement savings accounts is that savings grow at an accelerated pace. How? By using the “tax sheltered” feature of these accounts. Monies inside a retirement savings account grow tax-free, which means more of your money, compared to non-registered accounts, is compounding and growing inside the registered account each year.
And that’s one of the reasons that make retirement savings accounts such an important component of any retirement planning strategy.
What We Can Do For You
Our retirement planning specialists will review the broad spectrum of Canadian retirement savings accounts and choose the ones that are right for you:
- Registered Retirement Savings Plan (RRSP): An RRSP is one of the most common retirement savings accounts available to Canadians saving for their retirement. Contributions made to such accounts are not taxed, earning contributors a tax deduction in the year of the contribution. The money is only taxed upon subsequent withdrawal, hopefully in retirement – but under other eligible circumstances too. However, in contrast to non-registered savings, RRSP savings grow tax-free, allowing more of your hard-earned money to grow for longer.
- Tax-Free Savings Accounts (TFSA): Depending upon your financial situation, our advisers may recommend using a TFSA to help you save for retirement. Unlike contributions made to an RRSP, your TFSA deposits are made from after-tax dollars – i.e., you have already paid taxes prior to making those contributions. From here on, as is the case with RRSPs, your savings grow tax-free inside the TFSA account. But unlike RRSP withdrawals, money taken out of a TFSA is never taxed.
- Group Registered Retirement Savings Plans (Group RRSPs): Some Canadian employers offer Group RRSPs to help their employees save for retirement. In some cases, an employer may offer a matching contribution to each individual’s contribution into the account. Our experts will review the structure and terms of your plan, and recommend whether it is something that might fit into your own retirement planning strategy.
- Pooled Registered Pension Plan (PRPP): Where available and practical, our retirement planning specialists might recommend you take advantage of a PRPP. Quebec residents have access to a similar plan called the Voluntary Retirement Savings Plan. Similar in function to an RRSP, PRPPs are ideal for self-employed Canadians looking for a retirement savings option. The one advantage that PRPPs have is their size. Since funds from a number of individuals are pooled together, there is greater flexibility, synergy and opportunity when it comes to reducing costs and making investment decisions.
- Registered Retirement Income Fund (RRIF): Our service also covers advice and guidance when it comes time to convert your RRSPs into a Registered Retirement Income Fund (RRIF) – yet another account where your retirement savings can be invested and grown while in retirement.
- Other Retirement Savings Options: Canadians also have access to a variety of other retirement savings accounts, such as Life income fund (LIF), Locked-in Retirement Income Fund (LRIF), Prescribed Retirement Income Fund (PRIF) and Restricted Life Income Fund (RLIF). Not all of these are appropriate for every Canadian during retirement. Our experts can review each of these to see if there is a place for some of them in your retirement plans.
- Managing and Administering Retirement savings Accounts: Our expertise goes way beyond simply recommending a specific retirement savings account for you. Each of these accounts and plans have a plethora of rules and regulations attached to them. If you run afoul of any of those “dos and don’ts”, you could face the wrath of the Canada Revenue Agency (CRA). We’ll ensure that you understand all of the pros/cons of choosing one set of plans over another, and then advise you on how to go about making retirement savings a reality using those tools.