your mortgage as soon as possible. Think
hard about your car strategy—once the loan
is paid off, how many payment-free years
will you likely have before you have to buy a
new one?
Ultimately, some of this comes down to luck,
like the timing of a son or daughter finishing
university. If you help fund the majority of
their education costs, you’ll probably experience a significant cash surplus in the year after
graduation as these outflows are reduced.
4. Invest all excess cash in your
RRSPs
For the majority of Canadians—but especially those who start saving for retirement
later in life—RRSPs are the best bet. That’s
because most people are in a medium-to-high
tax bracket when they make their contributions, and in a lower one when they make
their withdrawals (i.e., during retirement).
In this scenario, RRSPs beat TFSAs pretty
handily.
The key to building retirement savings
quickly is to invest any excess cash in your
RRSPs, rather than spending it. And don’t
forget that spousal RRSPs should still be
considered if one spouse is in a higher tax
bracket than the other to balance out the size
of the RRSPs at retirement.
5. Reinvest all tax refunds into
your RRSPs
Building on step four, the golden opportunity
with RRSPs is to reinvest any tax refunds
back into your RRSPs. And yet many people
are not doing this—instead, they’re simply
spending the refunds. That is like “un-saving”
for retirement—getting a tax refund now, at
the expense of paying tax on the withdrawal
during retirement.
Efforts now will pay dividends later
Setting aside enough money for a comfortable retirement is not easy. It’s not even easy to
calculate the amount you’ll need to save. But
one thing is certain: If you’re within 10 years
of retirement and you don’t start to put time
and effort into this vital part of your financial
planning, digging below the surface to understand what your numbers mean, you won’t
be able to afford to live the retirement of
your dreams.
Planning for your retirement?
Helping clients plan for theirs?
Check out these upcoming PD offerings:
Personal Investing – June 15
9am-5pm, Hyatt Regency, Vancouver
Instructor: Kurt Rosentreter, CPA, CA, CFP, CLU, TEP, FMA, CIMA, FCSI, CIM
Designing Your Retirement Income – June 16
9am-5pm, Hyatt Regency, Vancouver
Instructor: Kurt Rosentreter, CPA, CA, CFP, CLU, TEP, FMA, CIMA, FCSI, CIM
Building Your Own Retirement Pension with Annuities – June 17
9am-12:30pm, Hyatt Regency, Vancouver
Instructor: Kurt Rosentreter, CPA, CA, CFP, CLU, TEP, FMA, CIMA, FCSI, CIM
Wealth Management Strategies for Affluent Canadians – June 17
1:30-5:30pm, Hyatt Regency, Vancouver
Instructor: Kurt Rosentreter, CPA, CA, CFP, CLU, TEP, FMA, CIMA, FCSI, CIM
Estate and Financial Planning for Private Business Owners –
June 21
9am-5pm, Vancouver Convention Centre (West), Vancouver
Instructors: Stephen Cheng; Dan Eisner, CPA, CA; Jon