59 Harmony-Drive
Saint John, N.B
E2J 2W2
Bus: (506) 696-7226
Toll Free: (800) 696-7226
Fax: (506) 658-0766
EMail:myleshe@nbnet.nb.ca
I am a representative of
Investors Group, one of
Canada's largest financial
organizations. You may
have seen our television
commercials or heard of
Investors through a friend
or associate. We provide
financial services to more
than 700,000 Canadians
from coast to coast, have
been in business for 50 years
and have over 3,200 well
trained and educated
representatives.
Our mission is simple.
To help individuals not
unlike yourself, achieve
financial freedom and the
peace of mind it brings.
Perhaps the greatest myth
is that you must be wealthy
to achieve financial freedom.
Not True.
In fact most of my
clients
start with very little to save.
Some with as little as $50
a month. But through the
proper habits, a technique
we call "Pay Yourself First,"
and the right savings
vehicle,financial freedom
is attainable.
We manage our business
by our core values: Quality,
Integrity & Responsiveness,
in all that we do. And there
are no obligations or
"hard sell" tactics with
Investors.
If you would be
interested to
learn what many Canadians
have already, please call me
at .
In the meantime, please
take a few moments to
read the articles
provided here.
See Also...
Spousal
RRSP Avantages
and
5 Tax-Smart Ways
to Save For Your Child's Education
What
Snowbirds Need to Consider Now
If you have any
comments or
suggestions
regarding the
material on
this website,
or questions
regarding your
financial future,
please don't
hesitate to
contact me.
INVESTORS
GROUP
Philip Myles
Account Executive
"...through
the proper
habits, a technique
we call "Pay Yourself
First," and the right
savings vehicle,
financial freedom
is attainable..."
The contents of this
website are presented
as a general source of
information only, and
are not intended as a
solicitation to buy or sell
specific investments, nor are they intended to provide
legal advice.
Prospective investors
should review the annual
report, simplified
prospectus,and annual
information form of a
fund carefully before
making an investment
decision. Copies of these
materials are available from
any Investors Group office.
Clients should consult their
professional advisor for
advice based on their
specific circumstances.
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Investors Group has provided
financial planning
services to Canadians for more than 50 years.
Our company currently helps more than 700,000
individuals and corporations plan their financial
goals and comfortably achieve them, through
wise tax, investment, and retirement strategies.
If you are approaching retirement, it's time to decide
what to do with the money accumulated in your Registered Retirement
Savings Plan (RRSP). Whether you're taking early retirement
or working well into your 70s, you have several choices.
Remember that flexibility should be uppermost in your
mind. Your retirement could last 30 years or longer, and
you may need to alter your income arrangements to deal
with the unexpected.
The new ages for retirement income
The 1996 federal budget proposals will reduce the age at which
you must collapse your RRSP to 69 from 71. If you turn 69
or 70 this year, you have until the end of 1997 to mature
your plan. If you turn 71 this year, you must mature your
plan by December 31. If you are 68 or younger, you fall under
the new rules -- you must mature your plan by December 31
of the year you turn 69. (This is
based on the assumption that the budget proposals will
become law without significant amendments.)
Your four choices
When you retire, you have four ways to generate
retirement income from your RRSP:
- Cash it in. You
could cash in all your RRSP holdings or make partial
redemptions as required until age 69. The cash
option is simple, but has some serious drawbacks.
Tax will be payable on the entire amount
withdrawn and you permanently lose all tax
deferral advantages. As a result, this option is
seldom chosen.
- Convert RRSP funds to a
term certain annuity to age 90. The snag
in this option is that payments last only until
you turn 90. If you live beyond that age, you'll
have to manage without these regular payments. In
addition, with interest rates currently so low,
annuity payments may be meager. Unless you have a
joint and last survivor option guaranteeing payments
to your spouse if you die or an option
guaranteeing a certain number of payments, the
annuity payments will be forfeited if you pass
away before the end of the term.
- Convert to a life annuity.
A life annuity guarantees payments for as long as
you live. This takes care of the problem of outliving
your retirement income, but works against your survivors.
To protect against this, many people choose a
joint annuity, which covers both spouses, or an
annuity whose payments are guaranteed for a
specified number of years. (If you die before the
end of the guaranteed period, the remaining payments
go to your named beneficiary.) The more guaranteed
options you choose, however, the lower your monthly
payments will be.
- Transfer your RRSP funds
to a Registered Retirement Income Fund (RRIF).
A RRIF is similar to a RRSP, except that payments are
made to you instead of by you. As with an RRSP, all tax
is deferred on income earned in the RRIF. The transfer of
RRSP must be made on or before December 31 of the year
you turn 69 -- this used to be age 71, but was changed in
the last federal budget, which has yet to be passed into
law. (Note that there are transition
rules, as set out in the last federal budget.)
You can hold virtually all the same investments in a RRIF
as you can in your RRSP. That includes investing in a
full range of mutual funds or choosing your own
investments in a self-directed plan to provide you with a
well-balanced retirement portfolio. As with your RRSP, up
to 20% of your RRIF (based on the investments' purchase
price) can be foreign content.
The Income Tax Act requires that you withdraw a minimum amount
from your RRIF every year. The amount is a specified
percentage of the value of your plan at the beginning of
the year and it increases every year. The percentage is determined
by your age (or your spouse's age, if elected). Withdrawals
must start the year after you establish your RRIF. All
amounts withdrawn are fully taxable.
Advantages of RRIFs
RRIFs offer a number of advantages over other
retirement income options:
- The minimum payment formula may provide you with some
inflation protection. The payout percentage increases
fractionally each year, leveling out at 20% of the
value of your RRIF once you turn 94. In most instances,
payments will increase well into your 80s and
maybe longer, depending on the earnings in your RRIF.
- You can withdraw more than the minimum -- up to
the full amount in your plan -- at any time. This
is particularly important if you need money for
an emergency or if you want to buy a recreational property
or take a trip.
- You control the investments in your portfolio.
For example, you may consider equity investing to
provide maximum long-term growth and protection
against inflation.
- If you choose the minimum payment option each
year, you'll maximize the tax deferral -- which
means you may continue to accumulate assets in
your RRIF.
- Should you die before your spouse, he or she can receive
payments from your RRIF unless you have designated
someone other than your spouse as the beneficiary.
Your spouse also has the option of transferring
your RRIF into his or her own, or even into an
RRSP if under 69 years of age.
- All amounts remaining in your RRIF can be made available
to your heirs by designating them as your beneficiaries-subject
to taxation on your death. If the RRIF passes to
a financially dependent child, the amounts can be
taxed in the hands of the child or the child can
purchase an annuity to age 18. A financially dependent
child of any age who is mentally or physically
infirm has the additional option of transferring
RRIF amounts to an RRSP or acquiring a life
annuity or a term-certain annuity to age 90.
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