To save the most during your working years, to build the largest possible retirement nest egg, tax planning is an absolute necessity. And it becomes even more important after you retire when you’ll need to maximize your (perhaps) limited income so you can live your dreams for all your retirement years. Here are some essential strategies for making that happen.

Income split Aim at reducing your family’s total tax liability by allocating up to 50 per cent of your eligible pension income (monthly pension payments and, when you reach age 65, RRIF income) to the lower income spouse/partner for tax purposes.

Share benefits Sharing CPP/QPP benefits with your spouse/partner can save significantly on taxes.



RRIF withdrawals are fully taxable; manage your taxable income by withdrawing as little as possible.

Take full credit Reduce the amount of tax you pay by taking advantage of all the federal tax credits (some with equivalent provincial credits) that apply to you including the Pension Income Credit, Age Credit, Medical Expense Credit, and Charitable Donations Credit, among others.

Allocate assets efficiently

Reduce taxes by holding fully-taxable, interest-generating investments inside a tax-sheltered RRSP, RRIF or TFSA and keeping eligible investment assets that generate capital gains or Canadian dividends and are taxed less outside your registered plans.

71 – before and after Be sure to take full advantage of the tax-sheltering benefits of your RRSP by making your maximum contribution up to the end of the year you turn 71. At that age, the government requires that you wrap up your RRSP(s) and convert the proceeds, usually to a RRIF. After you reach 71, consider putting any extra money into investments held within a TFSA where the funds can continue to grow tax-free and/or contributing to a spousal RRSP eligible investments until your spouse/partner turns 71.

Consider a guaranteed investment fund

This is a segregated fund that contains a guaranteed minimum withdrawal benefit so you can enjoy the potential investment growth of a mutual fund along with a guaranteed regular income which will not decrease.

Consider a Monthly Income Portfolio

This mutual fund option is more flexible and tax-advantaged than other non-registered options like a Guaranteed Investment Certificate (GIC) which locks in your money while locking it out of potentially higher returns and creating an immediate tax bill on redemption. A monthly income portfolio is designed to provide maximum investment returns along with a monthly income, a part of which is treated as return on capital – a tax-deferral strategy that can increase your after-tax monthly income.

Save on taxes now and after you retire by using all the tax-reduction strategies you can. Your professional advisor can show you how.

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.

Call David Brown at 250-315-0241 to book your appointment.