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Around the World in 100 Words, April, 2019:Week 14

This week’s ATW looks at an issue near-and-dear to our heart -financial security of Canadians at retirement. Let’s be honest, we all work hard and some rest and dignity in our golden years is well deserved. So how best to do it? Well, systematic savings of any kind is critical, but there are better routes than others. Pensions are great -if you can get them. For most Canadians, pensions, certainly the sort that give you a guaranteed indexed income for life, belongs only to government employees. In the private sector, that kind of pension is non-existent. So what is? Well, some companies set up defined contribution pension plans (called Group RRSPs), which sometimes involves the matching of contributions up to a given percentage. This kind of plan is better than nothing, and benefits higher income earners who are able to deduct their contributions from their taxable income. Moneys withdrawn in later years is taxable, but likely at a lower tax bracket. But is there a better alternative? Well, yes. The Tax Free Savings Account or TFSA gives Canadians the opportunity to save after tax dollars and generate tax free retirement dollars down the road. No carrot up front, but no stick when you retire. I like it. But do employers offer this? To-date, no. But democracy is a great thing! Asking your company to consider this option would diversify your retirement savings options and contribute to financial security in retirement.

Tax free dollars in retirement is a good thing, as it gives certainty as to exactly how much you have to retire on. It also helps to avoid claw-backs on government benefits and minimize taxes in your relaxing years. And that’s what we want to help you with!

As with every posting, please call me with any questions you have. I’m happy to discuss them with you.