Retirement Ready? or Not?
Retire the Way you were Meant too
Relationships are Fundamental
Our specialty is rooted in helping folks to improve their current financial position, preferably without impacting their current lifestyle. Our clients can often solve the issues uncovered in the four questions below, by focusing first on dollars one could be losing unknowingly and unnecessarily without taking on additional financial risk. Starting to plan for retirement begins now. Whether you are 30, 40 or close to retirement, its imperative that you start today.
Our experienced Certified Financial Planners are here to help you navigate the current economic conditions, to prepare you for those retirement years.
The answers to the questions below, can be given in our first ten minutes together, and they will give you an indication about where you find yourself currently with regard to securing your financial future.
1. What rate of return do you have to earn on your savings and investment dollars to be able to retire at your current standard of living and have your money last through your life expectancy?
2. How much do you need to save on a monthly or annual basis to be able to retire at your current standard of living and your money last till life expectancy?
3. Doing what you are currently doing, how long will you have to work to be able to retire and live your current lifestyle till life expectancy?
4. If you don’t do anything different than you are doing today, how much will you have to reduce your standard of living at retirement for your money to last to your life expectancy?
So what do Registered Plans do exactly?
Most people will be familiar with the fact that they defer taxes, which is true. But this term “defer” can often lead to a misunderstanding about what is actually happening. Some people fall victim to the misconception that “deferred” taxes are taxes they are “saving” because the taxes do not have to be paid; which is not true. These are not tax savings plans but rather tax deferred savings plans. The government did not say that you don’t have to pay taxes on the dollars in your Registered Plan; they said that you don’t have to pay the taxes now.
If not now, then when? Well, later obviously. The key difference between now and later though is relative to your tax bracket. What bracket you are in now, and what bracket you will be in when you decide to take the money out of the account. If you defer the tax and you are in a higher bracket later, than you are in today, your share of the account will be less. If you are in a lower bracket when you take the money out, than when you put it in you will get more.
CRA is not going to ask you what tax bracket you were in the day you made the contribution to your account. Their only concern is going to be what tax bracket are you in at the time of withdrawal. Because this is true, you will need to make an informed decision about which option is best for you.
When the government creates a problem (called taxation) and then turns around and grants you an exception to the problem they created (Registered Plans) aren’t you just a little bit suspicious that you’re being manipulated? Registered plans were all created under the guidelines of giving you a break. If the Government really wanted to “give you a break” – all they had to do is cut out the taxes! Do you really think they want to do that? … R. Nelson Nash -Author of “Becoming Your Own Banker”