how to plan for retirement retired couple

I am Retired. How can I pay less tax?

Congratulations! You worked hard to get where you are and you want to utilize your retirement savings as effectively as possible. The government has permitted you to defer paying income tax on your registered retirement savings — so far.

This is about to change.

What is the most tax-efficient method to access your retirement savings?

Every situation is unique and requires a customized approach in order to minimize losses due to income tax.

Hint: for most people, waiting until age 71 to access your RRSP is the least effective method.

A customized Retirement Tax Optimization plan (RTO plan) can bring you the clarity you’re looking for, while potentially saving you hundreds of thousands of dollars in taxes over the course of your retirement.

A properly developed RTO plan will leave more money in your pocket through careful, customized, withdrawals.

With five to ten years left before you plan to retire, it’s time to get serious. As an experienced Financial Planner in Kingston, Ontario, I can make a substantial improvement to what you would otherwise have available.

Effective planning today — including establishing tax shelters now for use at, or after, retirement — can dramatically increase what is available to you in retirement, in part by reducing the taxes you pay every year.

I can help you

Retirement should not be a DYI project — a spreadsheet can only tell you so much. Comprehensive post-retirement planning can be a game changer. Studies have shown that households using a Financial Planner have up to 273% of the assets at retirement that an otherwise identical household would have. In other words, most people will have nearly three times as much in retirement if they use a licensed professional to help them along the way.

Taking steps to create an effective RTO plan is a decision that will pay off as you approach later life, giving you the opportunity to have the income in retirement that you deserve. Or to have funds set aside if your medical needs in the future become excessive. Assuming that the government will take care of you in your twilight years may not be the best “plan”.

What happens at retirement?

Saving and preparing for retirement is only half the job. Deciding how, when, in what order, and at what rate to draw from the various potential income sources available to you is a far more complicated process. This is where a Retirement Tax Optimization plan (RTO plan) comes into play.

The most common strategy for accessing RRSPs, RRIFs, or LIFs is to “defer” until you can defer no longer. The year that you turn 71 you will be required to draw a minimum annual amount from all of your registered retirement savings — but is the government-mandated withdrawal strategy the most tax-efficient method? For most people, the answer is “absolutely not”, unless your goal is to pay as much income tax as possible.

There are 120 different potential “start dates” for CPP, each one providing a different income level to you. There are also 60 potential “start dates” for OAS. Taking into consideration your pension (with or without a bridge), your personal retirement savings, and any other assets you plan to use in retirement, which “start date” is the most tax efficient for you? Would it make sense to start drawing CPP or OAS while you’re still working?

A customized and effective RTO plan can answer these questions and potentially find tens of thousands of dollars (or even hundreds of thousands) that you would otherwise be paying to the government. These unnecessary payments are often in the form of income tax, reduced benefits, or claw backs. An RTO plan will integrate all of your retirement income sources and determine which to draw from, when, at what rate, and where to shelter it for later access. You remain in full control of all your assets — you just simply give less of it to the government.

I use a proprietary system (no “cookie cutter systems” here) to run scenarios for all possible strategies and generate a report showing which strategy is the most efficient for your specific situation. This is a very sophisticated process, but the results can be potentially life altering for you and your family.

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For a no-cost preliminary consultation to determine how much an RTO plan can improve your current retirement income strategy, contact me. If you’re interested in financial planning in Kingston or the surrounding area, I would be happy to help you find the solution that fits your unique situation.

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