The Citizen, 2007-02-01, Page 11THE CITIZEN, THURSDAY, FEBRUARY 1, 2007. PAGE 11.
Figuring out how much you need
to retire can be confusing. Where do
you start?
“Assess your financial situation
and personal needs,” advises
chartered accountant David Trahair,
author of Smoke and Mirrors:
Financial Myths That Will Ruin
Your Retirement Dreams and The
Entrepreneurial Itch.
“The general rule of thumb is that
you need 70 per cent of your pre-
retirement income, but each
situation is different. Figure out
your expected retirement income
and expenses. Do you own your own
home, or will you have rental or
mortgage payments? Do you have
other outstanding debt or financial
responsibilities, such as supporting
an aging parent?
“Also consider your RRSP
investments. Do you know what
your annualized Personal Rate of
Return (PRR) has been since you
opened your RRSP? Many
brokerage firms don’t provide this
information on their monthly
statements.
“It’s also smart to get rid of any
debt at a higher interest rate. For
example, if your PRR has been two
per cent a year on average since you
started your RRSP and your
mortgage is at six per cent, then
simple analysis shows that paying
off the mortgage leaves you further
ahead.
“Remember that your RRSP is
supplemented by the Canada
Pension Plan (CPP) and Old Age
Security (OAS).
If your RRSP is projected to
provide enough income during
retirement, you may want to
optimize its size so it doesn’t spit
out too much income and cause a
clawback on Old Age Security.
For further information about
RRSPs, contact a chartered
accountant.
– Brought to you by the Institute of
Chartered Accountants of Ontario.
How can a tax refund not be a
good thing?
“It actually means that you’ve paid
too much tax throughout the year
and are now claiming it back,” says
chartered accountant Tina A. Di
Vito, Toronto.
“In other words, you have given
the Canada Revenue Agency (CRA)
an interest-free loan until the time
your tax return is processed and you
receive your refund. One solution to
this problem is to have your
employer reduce your income tax
withholdings to reflect the RRSP
contribution you will be making
during the year.
“To start the process, send a
request to any tax services office of
CRA. Once approved, your
employer will be authorized to
reduce the withholding amount.
Your increased cash flow provides
an excellent opportunity to start a
monthly RRSP contribution
program or other savings strategy.
Why wait to get a refund when you
can pay less tax throughout the
year?”
Income tax withholdings may also
be reduced if a portion of your
remuneration is directed to an RRSP
by your employer. Care should be
taken to ensure that your
contribution limit has not been
exceeded.
For further information about
RRSPs, contact a chartered
accountant.
– Brought to you by the Institute of
Chartered Accountants of Ontario.
What size RRSP do you need to retire?
4.15%
Rate subject to change
Min. $25,000 deposit
(15 month term)
9 Rattenbury St. E., Clinton, ON N0M 1L0
Ph.: 519-482-9924 ~ 1-888-235-9260
Res.: 519-524-9260
Check out RRSP and RRIF plans designed to meet
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GIC, Mutual Funds, LSIF, Seg. Funds
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RRSP DEADLINE: MARCH 1, 2007
Who will look after your financial
obligations if you become injured or ill?
See Lawrence for a free consultation.
Let me help you retire in comfort & style
Trudy Kassies; C.F.P.
519-482-8304
Fax: 519-482-1784
10 King St., Clinton
RRSP Options
• GICs • Mutual Funds
• LSIFs • Segregated Funds
Call Trudy for your free consultation today
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YOUR INVESTMENT SHOPPERS
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Home # 519-482-3244
Cell # 519-524-0957
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Doug Sholdice
472 Turnberry St. PO Box 69
Brussels, Ontario N0G 1H0
Phone: 519-887-2662
Toll Free: 1-866-887-2662
Fax: 519-887-2671
Email:
salexander@peakgroup.com
Eliminate your tax refund
It is possible to use your RRSP to
invest in a Canadian-controlled
private corporation (CCPC).
“If you deal at arm’s length with
the CCPC, and the cost of the shares
you hold in the CCPC or a related
corporation is less than $25,000,
you can invest your RRSP in shares
of the company,” says chartered
accountant Jim Lockhart of Kenora.
“In determining the amount and
cost of the shares that you own, you
have to consider shares owned by
family members, both inside and
outside their RRSPs. Also, all or
substantially all of the company’s
assets must be business assets at the
time the shares are purchased by
your RRSP.”
“If you own less than 10 per cent
of the shares, there are generally no
restrictions on the amount you can
invest. If you own more than 10 per
cent together with family members,
the investment may not qualify as an
RRSP asset,” advises Lockhart.
For further information about
RRSPs, contact a chartered
accountant.
– Brought to you by the Institute of
Chartered Accountants of Ontario.
Use RRSP
to finance
a home