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PAGE 12. THE CITIZEN, THURSDAY, FEBRUARY 9, 2006.
Financial
60s radicals stay radical in their 60s
Returns completed in one
Electronic filing available
(NC)-Baby boomers — the same
demographic force that challenged
the social and political norms of the
'60s and '70s-are sparking new
controversies as they age.
Born between 1946 and 1965,
baby boomers are set to begin
turning 65 in 2011. Their mass
retirement and subsequent decline
into old age will cause radical
changes, especially in the areas of
work and health, says Jacques
Legare of the Universite de
Montreal.
"Aging boomers look forward to
long lives-but only if they're healthy
ones," says the professor emeritus of
population studies. "Euthanasia will
become the moral and legal issue of
If you're contributing to an RRSP
this year, it may be wise to take
advantage of the tax relief another
time.
"RRSP contributions do not have
to be deducted in the year in which
they are made:' says Scott Conner, a
senior tax manager in Huntsville.
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
of Toronto.
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
Every year we hear that we should
contribute the maximum to our
RRSP so that we can maintain our
current lifestyle in retirement. But is
this true?
"The truth is, many people simply
can't afford to maximize their
RRSP contributions each year," says
chartered accountant David Trahair
of Toronto. "It's tough on top of all
the other expenses like the
mortgage, kids, vacations and other
financial responsibilities.
The RRSP rules are designed so
that if you maximize your RRSP
contributions every year, you will
build a retirement nest egg that will
pay you an income of roughly 70
per cent of your pre-retirement
earnings. "Of course, each of us is
unique and may need less than that,
or even more," adds Trahair.
"If you pay off all debts including
the mortgage, car loans and credit
cards; if your kids have moved out;
and if you are in reasonably good
health after you retire; you may be
fine with as little as 40 per cent of
your pre-retirement income."
For further information about
RRSPs, contact a chartered
the next 20 years that abortion was
in the '60s and '70s."
And euthanasia is gaining
acceptance, he says, despite
considerable opposition.
"Baby boomers are not going to
accept suffering for its own sake, on
the basis, for example, of religious
convictions," adds Legare, whose
research on population aging is
supported by the Social Sciences
and Humanities Research Council of
Canada (SSHRC). "They will see to
it that society allows them to end
their days when and how they want
to."
Nevertheless, aging boomers will
still have to exercise some
responsibility toward the younger
"The contributions can be
deducted in that year or in any future
year. You should consider deferring
the deduction of your contribution if
you don't have much taxable income
in the current year. By deferring the
deduction to a year when your
marginal tax rate is higher, you will
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
accountant.
— Brought to you by the Institute of
chartered accountants of Ontario.
The right tax planner can
make tax season a lot less
taxing. This year, let us
prepare your taxes and enjoy
the convenience and peace
of mind that comes with
knowing your return is in the
hands of an experienced,
trusted professional. We'll
make sure you get all of the
credits and deductions you
deserve, so you keep more of
your hard-earned money.
Stop Stressing!
generations, says Legard, because
their children and grandchildren will
be too few in number to carry the
entire burden of their parents' and
grandparents' healthcare costs.
"Governments will have to create
special financial reserves to pay for
the needs of the elderly in the years
to come," he predicts. "But the baby
boomers themselves should be
contributing to these reserves long
before they retire."
For this reason, Canadian
workplaces will still depend on
those same aging boomers over the
next two decades.
"The 'Freedpm 55' message
familiar from television
advertisements hides the truth," says
save more in taxes.
"There are many reasons for this.
Perhaps you're a start-up business
owner and you don't have much
taxable income this year. If you were
able to contribute to an RRSP this
year, you shOuld consider deferring
the deduction to a future year when
information on the 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.
Lkgare. "It is socially and above all
financially unacceptable for the
baby boomers to stop working at age
55."
' In addition, businesses and unions
will have to demonstrate flexibility
in managing the workforce by, for
example, offering variable work
hours and by adapting tasks to each
worker's physical capacity, he says.
And this flexibility - and
adaptability will also be essential in
retirement and nursing homes.
Better educated and better informed
about their rights than previous
generations, the boomers are not
docile lambs who will simply accept
what they're offered. Remember,
these are the same people who
you may have a higher tax rate and
will save more in taxes. Remember
that delaying the deduction has a
cost in prepaid tax as you will not
get the benefit of the deduction until
the future. Therefore, you also have
to consider the time value of money
when making the decision to defer
the deduction of your RRSP
contributions."
For further information about
RRSPs, contact a chartered
accountant.
— Brought to you by the Institute of
Chartered Accountants of Ontario.
launched the protest movements of
the 60s and 70s.
For more information about
SSHRC-supported research, visit the
Council's website www.sshrc.ca
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