Retirement Planning

Registered Retirement Savings Plan (RRSP)

The registered retirement savings plan (RRSP) is a flexible savings tool that has a double benefit: your contributions provide you with a tax deduction and your investment growth accumulates tax deferred.

RRSPs are a focus of retirement planning with all our clients. Due to the tax advantage status of the savings plan, it allows our clients to avail of compounding returns without having to pay tax upfront. This advantage permits our clients to grow their retirement savings faster over time.

Features and benefits of the RRSP

Each year, you can contribute a maximum amount equal to 18% of your taxable income less any pension adjustments or, if you have a high income, the ceiling set by the government.
You can defer unused contribution rights to subsequent years.
The amount of your contributions is deducted from your taxable income, which could entitle you to a tax refund.
Your investment income is only taxed when you withdraw it from your RRSP.
You can convert your RRSP into a registered retirement income fund (RRIF) or another retirement income, at the latest on December 31 of the year of your 71^st birthday.

Locked-In Retirement Account (LIRA)

If you leave or lose your job, a LIRA allows you to transfer the funds accumulated under a retirement savings plan or your ex-employer’s pension plan to an individual plan. With the help of an advisor, you can put this money into investment funds and enjoy greater control over your investment.

Benefits and Characteristics of a LIRA:

Your savings grow tax deferred.
You may not contribute nor withdraw money invested in a LIRA except under certain conditions.
Upon retirement or, at the latest, the year you turn 71 years of age, you must convert your LIRA to a Life income fund (LIF).

Registered Retirement Income Fund (RRIF)

During your retirement, your RRSP will be converted to a RRIF. With this versatile plan, you can continue to grow your capital, tax exempt while taking periodic withdrawals as needed.

The RRIF is an extension of the registered retirement savings plan (RRSP). By periodically withdrawing a portion of your assets and continuing to accrue tax-sheltered income, it enables you to make the most of the savings you have built throughout your working life.

The law mandates that you take out a minimum amount each year from your RRIF. All periodic and lump sum withdrawals over that amount are subject to taxation. For this reason, it is important to speak with a member of our team to design a plan that minimizes your tax liability.

Locked In Retirement Fund (LIF)

The minimum amount that you must take out of your LIF is mandated by law. In addition, you are generally not permitted to take out more than the annual maximum limit. However, in extenuating circumstances, a bigger annual income may possibly be withdrawn.

To begin planning for your retirement, contact us today at Thomas J Power Investments and Insurance.