Planning for your retirement - Servus Credit Union

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Personal Pension Plans –RRSPs and MoreBecause you make the decisions regarding them, personalpension plans – based on savings, registered retirementsavings plans, or sometimes life insurance – give you themost flexibility in planning for your retirement.Registered Retirement Savings Plans (RRSPs) are one of themost popular personal plans. Contributions to your RRSP aretax deductible to allowable limits and the plan’s earnings aretax-sheltered. You pay tax only when you withdraw fundsfrom the RRSP – often at a lower rate after retirement.Credit unions, trust companies, life insurance companies,banks, investment brokers, and mutual fund companies alloffer RRSPs, with a choice of investment options.You may have any number of RRSPs, but your totaldeductible contributions can’t exceed specific limits basedon income, as set by government regulations. You may alsobe able to make contributions to a plan for your spouse,which can help reduce the family income tax in yourretirement years.RRSP Maturity OptionsYour RRSPs must mature before December 31 of the yearin which you reach age 71. This means you must make somearrangements by that date for your RRSP funds.Retirement income options include:• Transferring the RRSP funds to one or more RegisteredRetirement Income Funds (RRIFs).• Buying a Term Certain Annuity to age 90 (TCA 90)(also called Fixed Term Annuity – FTA).• Buying a life annuity.Or any combination of the above.If you don’t choose one of these retirement incomeoptions, you have the alternative of withdrawing your fundsin lump-sum amounts. These withdrawals will be subject toimmediate taxation at the applicable rates.You don’t have to have your RRIF or annuity with the sameinstitution as your RRSP – shop around for the best ratesand options.PLANNING FOR YOUR RETIREMENT 17
Registered Retirement Income Funds (RRIFs)RRIF payments are based on a schedule of your choice.Payments from a RRIF can continue throughout your or yourspouse’s lifetime.A RRIF is flexible enough that you can have the paymentsmade for a specific payment amount (e.g. $400 per month)or paid over a specific period of time (e.g. all payments madeover 10 years).Regardless of which payment option you choose at first, theschedule and amount may be altered to meet your changingneeds in retirement. However, you must receive a legislated“annual minimum amount”, calculated as a percentage ofthe RRIF balance at the beginning of the year. The formulafor calculating the annual minimum amount can be basedon your spouse’s age. For example, if your spouse isyounger, the amount will be smaller than if the paymentwas calculated based on your age.RRIFs are the most popular choice today for people whoseRRSPs are maturing.• You control your payment schedule.• You control the investment of your RRIF funds, with theoption of placing your funds in fixed-term investments,variable accounts, mutual funds or self-directed RRIFs.• A RRIF allows you to react to unexpected expenses thatyou can’t meet with your other sources of income. Inaddition to your regular payments, you can also withdrawlump sums from your RRIF to deal with emergencies.• The balance in your RRIF is paid to your estate orbeneficiary when you die, or the contract can continuein your spouse’s name.• Subject to the terms of your RRIF investments, you canconvert all or part of your RRIF to an annuity.• Depending on the type of investment you select, yourRRIF may be covered by deposit insurance. Prior tosetting up a RRIF with any financial institution, be sure toinquire about their deposit insurance coverage for RRIFs.18PLANNING FOR YOUR RETIREMENT
Page 4 and 5: How to Begin PlanningThere are thre
Page 6 and 7: Here’s WhereRetirement Income Goe
Page 8 and 9: Savings ultimately are not only a s
Page 10 and 11: Match Your Investments to Your Obje
Page 12 and 13: Worksheet for Planning Your Savings
Page 14 and 15: Old Age Security (OAS)People 65 and
Page 16 and 17: Disadvantages of This Kind of Plan
Page 20 and 21: Term Certain Annuities to Age 90 (T
Page 22 and 23: Some Tax ConsiderationsRRSPs, RRIFs
Page 24 and 25: Planning for Retirement LivingWhere
Page 26 and 27: • If you’re married, consider d
Page 28: ® HANDS & GLOBE Design is a regist

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