How to maximize retirement income

Retirement... It’s not what it used to be

It’s a new chapter, full of possibilities, and projects waiting to be explored. Retirement can last 20 to 30 years of your life, which is why planning ahead is so important.

Leaving your job isn’t the whole picture when it comes to your retirement. To build a retirement that meets your expectations, you need a clear, personalized strategy.

It all starts with a clear picture of your current situation. To get started, ask yourself these questions:

• At what age do you want to retire?
• Is it realistic given your current finances?
• How much money will you need?
• How much income will you have?
• After taxes, will that income be enough?

Together with your advisor, you'll need to develop a customized retirement plan that factors in the following:

• Your life expectancy and state of health
• The impact of inflation on your purchasing power
• Your investments that generate additional income
• Your estate, to decide who will inherit your assets

Taking advantage of government incentives

You’re under no obligation to apply for government benefits as soon as you become eligible. In fact, delaying your application can sometimes be a smart financial move.

Quebec Pension Plan (QPP)

If you delay applying for your QPP pension after age 65, your pension increases by 8.4% per year–and you can postpone until age 72.

Work part-time? Your QPP contributions during that time will still add to your future pension.

Old Age Security (OAS)

You can also increase your Old Age Security pension (This hyperlink will open in a new tab) by deferring your application beyond age 65. For each year you delay, you’ll get an extra 7.2% per year, up to age 70.

Making the most of your registered investments

Still have contribution room in your registered plans? Now’s the perfect time to put them to work for you. Every small step can help strengthen your financial foundation in retirement.

RRSP

Contributing to a Registered Retirement Savings Plan (RRSP) is an effective way to lower your taxable income... and grow your savings tax-free. You defer paying taxes until later, often when you’re retired.

It's useful if:

• You’re under age 71
• You work part-time
• You earn rental income (cottage, duplex, etc.)

Your spouse or partner will earn less than you in retirement. In cases like these, RRSP contributions can help balance your household retirement income. You benefit from the tax deduction today, and your spouse or partner will pay less taxes when they withdraw from their RRSPs later on.

TFSA

One of the biggest advantages of a Tax-Free Savings Account (TFSA) is that you don't have to pay taxes when you withdraw money—and those withdrawals don’t count towards your annual income either.

It's useful if:

• You still want to qualify for certain tax credits.
• You’re building an emergency fund.
• You have a lower income and may qualify for the guaranteed income supplement (This hyperlink will open in a new tab).

In short, the TFSA is a smart way to supplement your income, without affecting your benefits.

FHSA

Can I contribute to a First Home Savings Account (FHSA)? Yes—and why not, especially if you haven’t owned a home in the last four years? Even if you don't plan to buy a home or condo, the FHSA still offers the best of both worlds.

It's useful if:

• You rent and have already maxed out your RRSP.
• You want to contribute up to $8,000 a year to an FHSA. You may decide later to transfer the money to your RRSP.

Universal Life Insurance

Looking to protect your loved ones while growing your savings? Universal life insurance offers the best of both worlds:

• Permanent life insurance
• A tax-sheltered savings account

Your money grows tax-free. You can contribute based on your budget.

Once your other investment options have been used, you can withdraw these amounts. Only the return will then be taxable.

And the biggest advantage? At death, the full amount goes to your beneficiaries... tax-free.

It's useful if:

• You're planning your estate.
• You've already maxed out your RRSP and TFSA.
• You want your savings to grow without being taxed every year.

Stability first!

If don't like to see your investments fluctuate constantly, a life annuity might be just right for you. It guarantees a fixed monthly income for the rest of your life.

It's useful if:

• You're concerned about running out of money over the long term.
• You're looking for a simple, reassuring option.
• You want to know exactly how much you'll get each month.
• You’re looking for a smart way to manage your risks... with peace of mind.

The most important part–your disbursement plan

You've been saving your entire life. Now it’s time to plan how to withdraw the money.

This withdrawal strategy—referred to as a disbursement plan—is at the heart of your retirement planning.

A good plan helps you:

• Withdraw your funds in the right order
• Pay less tax
• Maintain your standard of living longer

It's useful if:

• You want to keep as much money as possible in your pocket.
• You're worried about outliving your savings.
• You want a stable, comfortable retirement.

Now let's talk about net income

When you retire, every dollar counts. There are many ways to increase your net income—without too much hassle.

Work at your own pace

You can choose to work for a while, at your own pace. A part-time job or occasional contract can bring in extra income.

You may also qualify for the tax credit for career extension (This hyperlink will open in a new tab).

Splitting your income as a couple

Are you receiving a retirement pension? Sometimes, you can allocate a portion of it to your spouse on your tax return. This can lower your combined tax bill, especially if one of you earns less.

Create a passive income

Do you have a cottage, a car or even a spare room? Renting out your property can bring in extra income. You can also check your credit cards to see if they offer interesting rewards.

Diversify your investments

Fixed-income investments, such as annuities or certain bonds, can help stabilize your portfolio.

Turning your home into income

If you're a homeowner, a reverse mortgage might be worth considering. It lets you tap into part of your home’s value without selling it.

Just make sure you fully understand the pros and cons before deciding.

What if your parents could help?

With their consent, taking out life insurance on your parents can be a smart way to build additional financial security for the family. Children can share the cost, and parents can decide if they want to participate.

Life insurance payouts are tax-free, making it an excellent way to preserve an inheritance and secure your family’s financial future.

When parents pass away, family members can focus on their grief without worrying about money.

The game plan tailored just for you

When you retire, there are many ways to make your income work for you. The best results are often achieved by combining different strategies.

Your advisor can help you choose what's best for you.

Because your retirement deserves a plan as unique as you are.