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When it comes to saving for retirement, a Registered Retirement Savings Plan (RRSP) is the #1 choice for most Canadians. A Tax-Free Savings Account (TFSA) can also be used to save for retirement, but it gives you the flexibility to save for short-term goals, too.

Here are a few ways the RRSP and TFSA stack up:

  • Your savings in an RRSP grow tax-deferred while your savings in a TFSA grow tax-free.
  • RRSP contributions are tax-deductible, helping you to pay less tax in your earning years. TFSA contributions are not tax-deductible.
  • You have to earn an income to put money in an RRSP. With a TFSA, you can contribute even if you aren’t working and earning.
  • You can’t keep saving in your RRSP after age 71—a TFSA lets you make contributions for life.
  • Withdrawals from a TFSA are never taxed. Withdrawals from an RRSP are taxed the year you withdraw the money.

To compare more features and benefits, see TFSA vs RRSP vs eSavings

Avoiding emotional investing, following proven principles and adjusting your plan for the right reasons can help you reach your goals.

  • Don't Get Emotional: Negative headlines and market volatility can make it tempting to alter a well-designed investment plan. While selling off your portfolio may make you feel better, this decision could mean lost opportunity and not achieving your long-term investment goals.
  • Follow these Principles
    Stay disciplined with these five principles of successful investing:
    • Invest Early
    • Invest Regularly
    • Invest Enough
    • Diversify
    • Have a Plan

    Explore These Principles

  • Adjust Your Plan as Needed
    Your investment plan should be dynamic, not static. Here are three “levers” that can be adjusted over the years to meet your changing needs.
    - Lever 1: How Much You Invest
    Concerned about not having enough money to meet your goals? Consider adjusting how much you contribute on a regular basis. Even a small increase can have a significant impact long-term.
    - Lever 2: How Long You Invest
    You can extend or shorten your investing time horizon based on your needs. For example, postpone retirement or re-enter the workforce if you want more time to build your wealth.
    - Lever 3: How Much Risk You Have
    This lever should be shifted carefully as your risk profile is core to your investment plan. The best way to do this is to review your portfolio regularly with your financial planner.

Your retirement will be as unique as you are. Travel, sports, hobbies … no one will combine these and other activities the same way you will. Your retirement plan should be just as unique.

After all, no one has the exact same retirement benefit plans, tax considerations and priorities as you. That’s why you need a personalized approach to provide steady income when your regular paycheque stops.

Working with an RBC Financial Planner is one of the easiest ways to get started with your retirement plan. In addition, you can use resources like the ones below to help guide your conversation:

Retirement means different things to different people—and that could include you and your spouse. Rather than waiting until retirement is right around the corner, talk to your spouse about what he or she wants out of retirement now.

Our interactive Your Future by Design® tool can help you get started.

Your Future by Design is a discovery process that you can walk through online and with an RBC Financial Planner. By asking the right questions, we can help you and your spouse identify what will be most important to you in retirement. Try it out now!

Timing your RRIF conversion is very important as this decision can impact the amount of taxes you pay and your government benefits.

You must convert your RRSP to a RRIF or an annuity—or cash it out (not typically recommended)—by December 31 of the year you turn 71. You can also make the switch before then if you need the income.

Since RRIF payments are considered taxable income in the year you take the money out, these amounts are added to your “other income” for tax purposes. Once you convert to a RRIF, you have to withdraw a minimum amount each year and that money will be taxed. Your withdrawals can also reduce certain government benefits such as Old Age Security (OAS).

For help knowing when to convert your RRSP, talk to an RBC Financial Planner. He or she can help you understand your options and suggest strategies to help you make the most of your income.

When you retire, your income could come from at least four different sources:

  • Government benefits such as Old Age Security (OAS) and the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP)
  • Registered Retirement Savings Plans (RRSPs)/Registered Retirement Income Funds (RRIFs)
  • Work pension plan(s)
  • Other personal savings and investments you may have

For advice on making the most of your income in retirtement, check out the following resources:

Knowing whether to right-size or sell your home is not always an easy decision. Before you decide, make sure you have a good reason and really think through the impact to your lifestyle, what you want out of retirement, and all the potential costs of selling and moving.

For more on this important topic, check out our Downsizing Case Study and Things to Think About Before Selling Your Home.

Thanks to better lifestyles and health care, people are living longer than ever. Today, a healthy 65-year-old has a good chance of living to 81. For a healthy couple, both age 65, there’s a strong possibility that at least one spouse will live past 90.

Of course, it’s impossible to know exactly how long any one person will live in retirement. But it’s certainly wise to plan for a long retirement. In most cases, you should plan for 30 years or more to cover a wide range of possibilities.

To help make sure your income will last as long as you need it to, contact an RBC Financial Planner today.

Taxes are an important part of income planning in retirement. That’s because you may be getting more of your income from personal savings and distributions from your investments, which can be taxed at different rates. This can have a big impact on the after-tax dollars that you have to spend in retirement.

The chart below shows the after-tax cash flow from different kinds of distributions.

It's not what you earn - it's what you keep. For every $1,000 in annual pre-tax cash flow, how much is left after tax? Interest: $650. Capital Gains: $825. Canadian Dividends: $862. Return of Capital: $1,000. Based on an investor with a 35% marginal tax rate. Note: Return of capital distributions are not taxable in the year they are received, but do lower your adjusted cost base, which could lead to a higher capital gain or smaller capital loss when the investment is eventually sold.

With careful planning, you may be able to reduce or delay paying tax on income from your personal savings. Ask an RBC Financial Planner to create a retirement income plan that gives you the income you need in the most tax-efficient way possible.

For many Canadians, health—and the cost of health care—becomes a prominent concern at some point in retirement. Many expenses may not be fully covered by provincial health insurance, resulting in additional out-of-pocket expenses you hadn’t planned on. To prepare for potential future health costs, it’s a good idea to ensure a portion of your investments are liquid and can be easily converted to income when and if you need additional funds. You can also set up an emergency savings account that offers easy access to cash.

Creating a plan that looks after your interests if you were to become physically or mentally incapacitated is also important, which includes deciding who will manage your affairs if you cannot (such as a Power of Attorney or Mandate in Quebec).

Also looking at lifestyle decisions, such as knowing whether to right-size your home, can help you be better prepared.

Retirement is a time of change. Working with an RBC Financial Planner can help you live your best retirement while preparing for potential health changes down the road.

If you're like many people, you may think that if you were to become mentally or physically incapacitated, your spouse or partner could simply act on your behalf. But this is not the case. Without a court order or a general Enduring Power of Attorney, your family members could not manage your financial affairs.

An Enduring Power of Attorney (Homologated Mandate in Quebec) gives someone you trust the power to make decisions for you.

You can set up a Power of Attorney for financial decisions, as well as a Power of Attorney for health care (or Advance Health Care Directive), which gives the power to make decisions about your personal care or health care. It also allows you to list which medical measures you are okay with. Even in areas where a living Will cannot be enforced, a Power of Attorney is an effective way to make your wishes known.

To learn more about Power of Attorney and estate planning, see What is Estate Planning and why does it matter?

Moving to the U.S. for part of the year is more complicated than packing your summer clothes and getting on a plane. There are important considerations to becoming a snowbird, including what items to bring, how long you are allowed to stay before you need to start paying U.S. taxes and the potential for losing your provincial health insurance coverage.

To see what you need to know, check out our Five Tips for Soon-To-Be Snowbirds.