According to Statistics Canada, between 2014 and 2016, a 65-year old man in Canada could expect to live 19.3 years; a woman, 22.1 years. That’s almost 3 more years of income a woman must have, on average, to meet her needs.
Taking steps early to create a retirement savings strategy can help you address these challenges.
8 ways to get started
1. Develop a financial plan
2. Get financial advice
A financial representative can help you create a plan to reach your goals faster. To make sure you’re working with the right advisor, consider asking these questions beforehand.
3. Understand government benefits
Find out about the financial support options available to you through the federal government, including the Old Age SecurityOld age security Canada’s largest public pension program. You qualify if you are age 65 and you have lived in Canada for at least 10 years after age 18. You may pay tax on your OAS income.+ read full definition (OASOAS See Old age security.+ read full definition) Program, the Canada PensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition Plan (CPP) and the Guaranteed Income Supplement (GIS)Guaranteed income supplement (GIS) Extra money from the government for people with low¬ incomes who get Old Age Security. What you get depends on your income or your joint income if you have a spouse or common-law partner. GIS is not taxable.+ read full definition. Find out how much is available, whether you’re eligible and any other conditions that may apply.
4. Take advantage of a spousal RRSP
Savings in an RRSPRRSP See Registered Retirement Savings Plan.+ read full definition are taxed when you take them out at retirement. A spousal RRSP (for married couples and common law relationships) allows couples to balance income in retirement. To learn more about the taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition impact, visit the Canada Revenue Agency’s website.
5. Use a TFSA for supplemental income
InvestmentInvestment An item of value you buy to get income or to grow in value.+ read full definition income from a Tax-Free Savings Account (TFSA) can complement your RRSP and what you receive from government sources or a private pension plan. Like an RRSP, funds in a TFSATFSA See Tax-Free Savings Account.+ read full definition can grow tax-freeTax-free Money that you do not pay tax on.+ read full definition. Unlike an RRSP, funds removed from a TFSA are not taxed, which can help reduce the income taxIncome tax A charge you pay based on your total income from all sources. The Canadian government and your province set the rate.+ read full definition you pay in retirement.
6. Personal Insurance
Insurance provides financial protection for a named beneficiaryBeneficiary The person(s), institution, trustee or estate you choose to give money, property or other benefits when you die. You may name beneficiaries in your will, insurance policy, retirement plan, annuity, trust or other contracts.+ read full definition. Take the time to understand all of the policies available to you and what they offer so you can choose the right type and amount of coverage that fits your life.
7. Provincial and federal tax credits
The Ontario government provides the Ontario Senior Homeowners’ Property Tax Grant and the Trillium Benefit. Trillium includes the Ontario Energy and Property Tax Credit, which offers a higher amount for eligible seniors. The federal government also offers credits, including one that may apply to those aged 65 and over.
8. Think ahead about estate planning
Make plans for your estateEstate The total sum of money and property you leave behind when you die.+ read full definition early to help ensure the transfer of an estate occurs smoothly and taxes are minimized. Learn more about estate planning considerations for the death of a spouse.
Planning for retirement begins well in advance – not just planning what you’ll do, but how you’ll pay for it. Learn 7 ways you can financially prepare for your retirement.
Check out these websites for more information:
- For a complete list of benefits available to seniors in Ontario, visit CanadaBenefits.gc.ca.
- Check out the federal government’s website for seniors for additional detail on estate and retirement planning.
- Find tools to help plan for your retirement at Service Canada’s website.
The average after-taxAfter-tax The money you have left after you pay taxes on money that you made working or investing.+ read full definition income in 2009 for elderly males was $26,700 compared to elderly females at $22,400. (Source: Statistics Canada)