The Rural Voice, 1990-02, Page 18Would you
like to discuss
Retirement Planning?
PROFESSIONAL INSURANCE
REPRESENTATIVES
WATKINS, DAUGHERTY
& ASSOCIATES
LICENSED INTERMEDIARIES
FOR
IMPERIAL UFE
Estate Planning, Business
Insurance, Group Benefits,
RRSPs, RRIFs, Annuities,
Disability Insurance,
Retirement Planning,
Equity Funds
The Imperial Life Assurance Company
of Canada
305 King Street West, Suite 609
Kitchener, Ontario N2G 1 B9
LUCKNOW:
LISTOWEL:
KITCHENER:
528-3514
291-5040
744-5281
CANADIAN
CO-OPERATIVE
WOOL GROWERS
LIMITED
WOOL CLIPS
PURCHASED
500 per ib.
* Skirted Fleeces
* Well Packed Sacks
PROMPT PAYMENT
For more information contact:
RIPLEY
WOOL DEPOT
John Farrell
R.R. 3, Ripley, Ontario
519-395-5757
14 THE RURAL VOICE
WISE MOVES
Financial Strategies for Farmers
Bob Watkins
"Wise Moves" is a series of articles pro-
vided by Watkins, Daugherty & Associ-
ates. Taking as a case study the farm of
"Martin Wise," financial experts Richard
Daugherty and Bob Watkins outline vari-
ous ways that farmers can enhance their
financial planning and security.
Your questions and comments are wel-
come: telephone Bob in Lucknow 528-
3514, Richard in Listowel 291-5040, or
Kitchener (Imperial Life regional office)
744-5281.0
SPOUSAL RRSPs
While our insurance represen-
tative was over talking to my father
about retirement income (see The
Rural Voice, January 1990), I decided
to ask some questions about retire-
ment planning myself.
It seemed to me that Dad was go-
ing to get a lot of income in retirement
while Mom was going to receive just
her old age pension. This meant that
Dad was going to be in a high income
tax bracket and Mom would pay no
tax at all. Our representative agreed
that this was not only a common prob-
lem, but one that can be corrected
while contributing to RRSPs. The sol-
ution is income splitting. This simply
means that the husband and wife
should each have the same amount of
money coming in when they retire. It
also means that less tax is paid.
Mary and I could see his point,
but Mary had no earned income and
so could not contribute to a Registered
Retirement Savings Plan. It was then
that our representative introduced us
to Spousal RRSPs. You see, I can
contribute to an RRSP in Mary's name
and she will own the money immedi-
ately. This means that when she re-
tires she can use it to produce income
for herself. I can still only contribute
20 per cent of my earned income to a
maximum of $7,500, but I can put any
part of that into a plan for Mary.
Richard Daugherty
This made good sense, so we set
up a spousal plan for Mary by arrang-
ing for $100 to be transferred auto-
matically from our bank account to the
insurance company every month.
Our representative remarked that,
without realizing it., we had taken the
first step in developing a retirement
plan for ourselves. Now there were
other things to consider, such as how
much money we would need to live on
in retirement and where it would come
from. We had already decided it was
not a good idea to sell the farm to pro-
duce retirement income. Also, Mary
would not be receiving benefits from
the Canada Pension Plan because she
had not contributed to it.
With the help of our representative,
we calculated the amount of money
we would have to save monthly to get
the income we will need. This formed
the basis of our retirement planning,
and he also suggested that we review
and update this plan regularly to make
sure we stay on track. Retirement
planning is not complicated, but we
were glad we had our representative to
counsel us on the best approach to
take for our own particular situation.
By the way, did you know that the
cash value in a whole life insurance
policy grows tax deferred, similar to
that of an RRSP? It is an effective
way to split income as well.0