Loading...
The Citizen, 1996-02-21, Page 6Helping hands Members of Majestic WI are busily preparing a quilt, the sale of which will be a fundraising project for The Ark. The funds will be used for the running of the SAFE (Substance Abuse Free Environment) program. This teaches pre-teen and early teen participants how to make wise choices and skills on dealing with outside influences and pressures. At work on the' quilt are, from left: Ruth Sauve, Ida Evans, Marie McTaggart and Helen Gallop. "YOUR" MONEY MATTERS Dear Linda, I understand that when I reach retirement age my RRSPs must be rolled over into an RRIF. How do these work? If I had $300,000 in RRSP savings, what income could I expect? And if I should die earlier than expected, what happens to the unused portion of my money? Signed, Interested Reader Linda Henhoeffer Dear Interested Reader, You have excellent questions about what happens to RRSP savings at retirement. Most of us understand how RRSPs work, especially the part about the income tax refund! Few of us, however, have a good understanding of what happens with our savings in our RRSPs when we retire. There are three choices as to how to take money out of your RRSPs at retirement. The first choice is to simply withdraw all the savings in cash from your. RRSP. This is usually NOT recommended as all the cash is .added to your other income and income taxed. This will likely result in you-having to pay a large part of your cash withdrawal as income tax. The second choice is to buy an annuity with the savings in your RRSP. A lump sum is deposited into the annuity and you receive a monthly income from the financial institution that issued the annuity, usually a life insurance company. The income received is determined by interest rates at the time the annuity is set up, your age and sex. Since interest rates today are relatively low, then your monthly payments will be lower than if the annuity had been set up in the 1980s when interest rates were much higher. The monthly payments remain the same, even though inflation will decrease the value of your monthly income. At death, your spouse or your estate does not receive any money from the annuity unless this has been agreed upon when the annuity was set up. To have any funds continue to your spouse or your estate, your monthly income will be reduced. The third option is to roll your RRSP savings into a Registered Retirement Income Fund (RRIF). This is usually the best choice because the investor has control. 1. you choose where the savings are invested eg. banks, life insurance companies, mutual fund companies. RRIF investments can be moved from one financial institution to another, similar to RRSPs. 2. you choose the kind of investment, eg. GICs, mutual funds, stocks, bonds. The only limitation is the Canadian content rule of 80 per cent, the same as for RRSPs. 3. the amount withdrawn can be increased or decreased, as along as the minimum is withdrawn. Also, lump sums can be withdrawn. 4. a beneficiary can be named. If the beneficiary is your spouse, then at your death your spouse receives the savings remaining in your RRIF with no income taxes or probate fees. If the beneficiary named is someone other than your spouse, then your estate is income taxed on the savings in your RRIF, but no probate fees are paid. If you name your 'estate as your beneficiary, then both income taxes and probate fees have to be paid on the savings in your RRIF. 5. income tax is only paid on the amount withdrawn from your RRIF. The remainder of your savings grows with no income tax. If your RRIF has $300,000 in savings, the minimum required to be withdrawn in the first few years is approximately seven per cent. This is an annual income of $21,000 or $1,750 per month. Of course, you may withdraw more money from your RRIF if you wish. Best wishes for a long and happy retirement! 'YOUR' Money Matters is sponsored by Linda Henhoeffer, Financial Advisor with the Investment Centre, Trimark Mutual Funds Company. To have your questions answered, send them to The Citizen at Box 429, Blyth, ON NOM 1H0. Everyone who sends in a question will receive a free 'Financial Planning Calculator' computer disc compliments of Trimark. THE EDITOR, Members of Parliament will be returning to Ottawa in the very near future to begin a new session of parliament. The Throne speech will officially open the new session and offer a fresh political agenda and set the tone for a renewed focus on essential government business. In order to facilitate the business of parliament and to avoid unneces- sary repetition, Government House Leader Herb Gray will be propos- ing a motion to reconvene the new session at the point where the last session ended. This motion must have the support, agreement and co-operation of all parties. When the House prorogued, there were 24 government bills remain- ing on the Order Paper, including Bill C-101, the privatization of the CN Railway and Bill C-111, the introduction of the new Employment Insurance Program. In addition, the government will announce its national unity t#ategy, its continuing plan for job creation and economic develop- ment, and also table the federal budget. In his fiscal and economic update, Finance Minister Paul Martin announced that the federal deficit for 1997-1998 will be reduced to two per cent of Canada's Domestic Product (GDP). The economic climate must instill confidence in consumers. Lower interest rates allow consumers to make more confident predictions and choices. This benefits our entire economy. We have proven that our strategy of two-year rolling deficit targets works. It has created a new Continued from page 4 tions and student learning. Children at risk need early intervention to succeed in school. According to the Ontario Child Health Study - Children at Risk, one child in four shows signs of developmental failure. The 1985 All-Day Kindergarten Study by the Toronto Board of Education showed that four-year-olds have a tremendous capacity to learn and to make up lost ground, particularly in language skills. By intervening at an early age when children are still amenable to behavioral and social changes, and when opportunities for physical and intellectual growth can be provided sooner, great academic and social strides can be made within the child, within t he classroom and school system and within society as a whole. Because of this, we can state that junior kindergarten is also fiscally sound. A longitudinal study which tracked the progress of students who entered the system at four years of age in 1962, discovered that by the time these students who entered the system at four years of age in 1962, discovered that by the time these students were 27 years old, every dollar spent on their program at four years of age had saved $7 in education, health, social services and the justice system when compared with their peers who had not had the early start. Children who attend JK stay in school longer; have improved 'Credibility for the government's fiscal forecast. We remain on track to meet the 1995-1996 target of $32.7 billion, the 1996-1997 target of $24.3 billion and the 1997-1998 target of $17 billion. We are meeting these targets due to $25 billion in spending cuts in the 1995 budget, the toughest fiscal action undertaken by any federal government in the last 50 years. At the same time, in meeting our targets, our government must also ensure that pursuing fiscal priorities does not create a social and technological deficit that would hurt those least able to cope, and undermine the potential for future economic growth based on our competitiveness in science, technology and innovation. Our government must also support entrepreneurial Canadians whose sound business proposals will in practice, encourage further job creation and consumer confidence. This year for the first time Canadians will be able to send their views directly to the finance mini- ster via the Internet. Messages can be sent E-mail (pmartin@fin.gc.ca ). Tens of thousands of interested groups and individuals send their views to the Finance Minister by regular mail each year. The bulk of these letters and submissions arrive during the budget period. Many of them provide ideas and suggestions that are considered during the preparation of the budget. I encourage you to become involved in the process, to partici- pate and make a contribution to your future. Paul Steckle, MP, Huron-Bruce. reading, math and language skills; a greater chance of future employ- ment; lower rates of teenage pregnancy and delinquency and higher enrollment in post-second education. Though not immediate, these results nevertheless make an impact on the whole of society. The Huron County Board of Education, despite the smaller population which it serves and the reduced revenue sources with which it must work, has shown itself to be a progressive board, offering its students an excellent, competitive base through its education system. Huron County parents have shown unexpected support for the junior kindergarten over the past two years, with approximately 370 JK students enrolled. In smaller schools, JK has helped to supplement SK class sizes and to make them more cost- effective in terms of staffing. Because of this only 5.5 JK teaching positions were actually in jeopardy in Huron. By running all-day every-other day programs the board has also been able to offer JK at a much lower transportation cost than other boards. JK/SK teachers within the system have related that students moving on to Grade 1 classes will be much more ready to cope with literacy, numeracy and social/ behavioral expectations — and this will cost the rtem less over time. The educatiOn systems Premier Harris' government holds up for Ontario to emulate, such as Japan and Germany, all have strong early Free tax advice from Goderich CEC For individuals needing assis- tance with their income tax, free help is close at hand. Revenue Canada operates an income tax clinic at the Canadian Employment Centre in Goderich on March 14, 21, 28, April 4 and 11. The time is from 9 a.m. to 3 p.m. A Revenue Canada employee, Jill Boyer, is at the clinic on those days to answer questions, help you fill out your tax return or double check your completed form. childhood programs. A government that is looking at maximizing potential and making maximum use of education dollars should realize that JK programs will fulfill bOth of these mandates. Cutting these pro- grammes would only result in short term gains and long term losses. According to John Snobelen, further government study to revisit the concept of early years educa- tion is on-going. Cutting JK within Ontario public school boards would send an unfortunate message to this government. Our Board, by waiting for the results of the Eckert study on Junior Kindergarten, is sending a different message. To date, only two boards of education have elected to commit to JK. Nine boards have withdrawn it, and the others are on stand-by. Congratulations again to the Huron County Board for demonstrating its leadership in the province and its commitment to the young children of Huron County! Wilhelmina Laurie, President, Huron Women Teachers' Association. Micromani. The Ultimate Computer Store Full selection of computers, accessories and stationery supplies. We are an authorized IBM, AST, CANNON, COMPAQ and H.P. dealer Sega & Nintendo 135 Wallace Ave., N. USTOWEL (519) 291-9633 Fax 291-9634 PAGE 6. THE CITIZEN, WEDNESDAY, FEBRUARY 21, 1996 Letters MP comments Letter to the editor Teacher speaks for JK