retirement planning

In the aftermath of the US housing market bust and the ensuing financial meltdown that led to global stock market declines of 2008, people are getting back to the basics as far as their retirement planning goes. Although the stock market has recovered, many pre-retirees have lost a lot of ground in their retirement accounts and are facing a new reality.

Tax Free Savings Accounts (TFSAs) were introduced in 2009 and they seem to be struggling to catch on. Registered Retirement Savings Plans (RRSPs), however, have been around for over fifty years and attract billions of dollars of deposits each year. If you are serious about saving for your future, it is important to know the differences between the two.

In a 2010 report to the Minister of Finance, it was found that approximately 160,000 Canadian seniors were not aware of the full range of benefits they were entitled to in their retirement years. In fact, nearly $1 billion in retirement benefits from the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) have not been paid out to eligible recipients.

On May 25, 2009 Finance Canada announced some proposed changes to how Canada Pension Plan will work.

If approved, the changes will take effect over a period of time from
2011 to 2016, so they will affect anyone planning to retire after 2010.

Below is a brief summary of some of the most important changes:

Retirement funding is a complex machine, with several moving parts. For many Canadians employer pensions and government benefits will make up the core of their retirement income.

A recent RBC survey found 54% of Canadians expect their pension will be the largest source of income, but when asked what kind of pension they have, 19% do not know.

Ralph and Louise have seen the TV commercials featuring Gordon Pape, the financial author, as the spokesman for Canadian Home Income Plan Corp. (CHIP) reverse mortgages. They were wondering if it would be a good way to go to help ease their current financial situation.

More than 65% of Canadians have made deposits to Registered Retirement Savings Plans (RRSPs). Many do so just for the tax savings, but here are some often overlooked tricks you should be aware of:

Roger and Linda are approaching their retirement. With continuing volatility in the markets, they are concerned about what effect a market downturn in the few years leading up to or just after retirement would have on their income. They also think that GIC investments would not protect their retirement income very well from inflation.