13 - Retirement Planning Process Flashcards
5 basic steps of retirement
Determine objectives
Determine current financial status
Estimate total retirement income sources and need
Establish plan to meet needs
Monitor and evaluate
Explain the tax minimizing strategy of transferring the age credit to a spouse
Transfer unused age credit to spouse if over 65 if they have room
It is a non refundable tax credit
Tax savings on 15% of approximately $7500 (federal only)
Credit declines with income over $37,790 totally gone with $87,750
Tax credit is looked at individually, not as couple
Tax minimizing strategy of building tax efficient portfolio
Tax preferred investment in non registered
Tax minimizing strategy of minimizing lifetime tax liability
Plan income based on overall tax bill for lofe
Tax minimizing strategy of giving to charity
Donate publicly traded securities
- tax credit on FMV at donation time
- no capital gains
For those in top bracket ($210k) can get extra tax credit
- usually 15% on first $200, then 29%
- for high earners, upper amount is 33%
Tax minimizing benefit of sharing pension benefits
During cohabitation can split CPP
Tax minimizing strategy of transferring money to cover interest on investment loan
Higher income gives money to pay interest on investment loan
When can RRSP income be split
65
Tax minimizing strategy of pension income tax credit
$2000 tax credit when 65
Tax minimizing strategy of transferring non refundable personal tax credits
You can transfer 4 credits to higher earners
- age credit
- disability credit
- pension credit
- tuition credit
Tax minimizing strategy of moving dividend income
If higher income earner reports all dividends of lower earners, the higher income earner gets dividend tax credit and lower earner pays less tax
- all dividends must be reported, no partial
May cause OAS clawback
