Every couple wants to spend retirement in peace and comfort. While it's a beautiful thought, partners must put significant effort into organising and optimising their finances to make that a reality. Working with an expert retirement planner can help you determine legally viable financial options and solutions. You can also learn about various ways to generate income, preserve wealth, and save on taxes. So, let’s gain some insights that underline the importance of involving experts and taking a proactive approach in this direction.
- Government Benefits - Canada Pension Plan (CPP) & Old Age Security (OAS)
CPP and OAS are some of the major government programs that provide financial strength to Canadians in attaining their retirement goals. CPP works like a pension plan. It can replace your basic earnings during retirement. You contribute to the CPP while still working to reap the benefits from the early age of 60. However, delayed withdrawals from age 70 can get you a high monthly payout. Couples can choose the delay option to enjoy more lifetime benefits depending on their health, income needs, and longer life. Otherwise, early collection is wise. Also, couples can split their pension to reduce taxes. It works well when one of the partners has to pay a high-income tax and cannot increase their contributions. Do you want to know the best decision regarding this in your case? If you are in Ontario, visit Alpeh Retirement Planners once.
Furthermore, Canadians age 65 or older can opt for monthly OAS benefits. During working years, you don't contribute anything. Instead, you get income from tax revenue. However, one must be careful about the OAS clawback rules. Depending on the circumstances, deferring OAS's monthly payments can be rewarding.
- Tax benefit strategies - Registered Retirement Savings Plans (RRSPs) & TFSA (Tax-Free Savings Accounts)
Although various programs are accessible, RRSPs are the popular retirement planning option known for their income generation and tax-deferred growth possibilities. You contribute a small amount to your RRSP annually to reduce your income tax. There is a limit to how much you can deposit. If you start your contributions early or give a lump sum, you can unlock a way to witness tax-free earning growth. There are special provisions for common-law or married couples in Canada. For example, a higher-earning partner can contribute to the lower-earning partner's RRSP account. While it allows one partner to reduce tax liability, the other enjoys retirement benefits.
As with TFSAs, it's an excellent savings tool for individuals and couples. The plan was launched in 2009 to empower Canadians to save and double their investments. Considering it is part of your retirement plan as a couple, you can make around C $ 190,000 in tax-free income through your respective TFSAs. One person can contribute up to C$7,000 a year, with a cumulative limit of C$95,000 as of 2024, provided they have been eligible under 2009 provisions. When both partners access the benefits, the combined amount potentially totals C $ 190,000.
These are just glimpses of what you two can do and how. Financial decisions must be revisited and consolidated occasionally, aligning with the current legal arrangements and implications. You and your partner can improve your retirement goals smoothly by consulting the market experts.
