The tax advantages registered retirement savings plans (RRSPs) offer make them the default choice for many Canadians. Investors often use them to save, and then roll the money into registered retirement income plans at retirement.
While typically the right strategy, RRSPs have restrictions that limit how much you are eligible to invest on a yearly basis when working towards your retirement goals. Many investors are not familiar with the options available to help them invest for retirement beyond their registered plans to further reduce taxes payable each year.
Whether you are in the process of deciding what products to use to save for retirement or are starting to consider from where you will take your income at retirement, there are many things you can do to help you reach your retirement income goals, while strategically deferring tax.
Increasing your savings
Corporate class mutual funds are structured to provide maximum tax efficiency in non-registered accounts. The funds can reduce ongoing distributions and defer taxes when switching to other funds to rebalance your portfolio. The funds are also designed so you receive tax-preferred capital gains or dividend distributions from the fixed income and cash management funds.
Planning an income
Whether you’re saving for retirement or beginning to think of ways to draw income from your non-registered funds, there are tax-efficient solutions to help maximize the efficiency of your financial security plans. Your financial security advisor can help you determine what combination is most beneficial for you.
Scott Beck, B.Comm, EPC, RHU is a financial security advisor with Freedom 55 Financial, a division of London Life Insurance Company, and an investment representative with Quadrus Investment Services Ltd. He can be contacted at 613-577-9407, by email to firstname.lastname@example.org or by clicking on the ad below.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of the writer’s knowledge as of the date submitted for publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.