How to create Tax Sheltered & Guaranteed Tax Free Income for Life
Many of the clients we work with believe that if they have $1,000,000 in their RRSP at retirement they will be financially stable for the rest of their retirement years. But it is not only how much money you have, but how much of that money will you keep after paying the deferred taxes within your RRSP?
As we say, its not how much you have, but how much you get to keep.
So this article will focus on three hot topics on every retiree's or future retiree's minds, how much will I have, how much I will keep & how long will it last? These are the most important factors when you are trying to create a solid sustainable income for your retirement years.
The First Fundamental to understand is that people are living longer into retirement these days, and the fear of running out of money is one of the hottest topics around. Author and Associate Professor of Finance at York University Moshe A. Milevsky Ph.D recently published a book Pensionize your Nest Egg, which addresses the fundamental need to create a pension out of your savings as opposed to just hoping it will not run out.
The Second Fundamental to a successful retirement is knowing how much money you will have at retirement, and how much of an income will be provided by that sum of money. It is shocking to us, that when we talk with many families who are saving for their retirement that most of them do not know exactly how much Income will be provided to them when they choose to turn their Savings into Income. This should be your foundation for savings, if you do not know how much you will have, how do you determine how much you need to save?
And the Third Fundamental is how much of that Income will you actually keep after the erosion of taxes upon your savings. In a typical RRSP account there is a substantial amount of taxes that have been deferred along the way. In fact even the interest you make inside your RRSP savings account will be taxed as well. So you not only pay taxes on the money that sits in there, but also the growth of that money over time. This alone can add up to Hundreds of Thousands of Deferred Tax Dollars sitting inside your ideal $1,000,000 portfolio...
So how can you create a sustainable Tax Friendly investment over your lifetime, where you know how much you will have (Exactly) and how much will you receive (Exactly) and how long will it last (Exactly). This is where today's idea comes from.
Use a Tax Free Savings Account with a GMWB guarantee. Your Savings will grow over your life Tax Free , and when you choose to retire, you will know exactly how much you will receive Tax Free which is guaranteed, and you will know that it will last for your entire life, whether you live to 70, 80, 90 or even 100 years of age. All Guaranteed!
If you have not heard of this strategy for Saving for your Retirement, you need to give our office a call so we can show you exactly how this would work for you in retirement. Don't keep throwing your money into an RRSP which will become a Tax Burden to you in the future. Without a True Income Plan, you will be dramatically surprised come retirement about the uncertainty of your savings...
When you ask why your Bank Advisor has not come up with this idea, do not be mad at them, they are not allowed to offer you this type of strategy, as it is exclusive only to the clients of an Investment and Insurance Advisor... Call us today to see how we can integrate this into your current retirement and savings plan.