Utilizing your retirement income

Retirement Planning

For many of us, retirement will mean big changes to our financial lifestyle.

When the time comes, you might find yourself asking, how do I go about dipping into my retirement savings?

As financial planners, we have heard it all. One of the biggest myths we hear is that people believe they should use their non-registered money first, so that their tax-deferred registered money remains sheltered from tax until needed. While it appears a sensible plan at first glance, it wouldn't be our first suggestion.

What do we suggest? We recommend using a combination of both registered and non-registered funds together.

• Non-registered funds, pertain to funds that are not registered with CRA, otherwise known as open accounts. These types of savings plans don't typically have restrictions in terms of how and when you access your money, as well as how much you can contribute to them.
• Registered funds, pertain to funds that have been registered with the CRA such as RRSPs and TFSAs. These types of savings plans offer great potential for investment growth, as well as tax deferred growth.

Because both types of plans have different benefits, it is always a good idea to hold both in your investment portfolio-allowing you the opportunity to pull from both during retirement.

Why? By using a combination, you could find that your retirement income lasts longer and there's the potential to see after-tax savings. 

To help you get a better understanding of just how beneficial combination withdrawals can be in retirement, take a look at the following case study.

The study was based on the following client information:

•         Retirement assets totalling $1,725,000
•      $500,000 is non-registered and $1,225,000 is registered 
•         Requires $62,500 per year in retirement income
•        Tax rate is 15% on the first $40,000 of income and 40% thereafter
•        Zero growth is assumed on the investments

Make the most of your retirement savings. Contact our office today and let us help you plan for your future.