8 New Fundamental Rules of Retirement

The days when your company pension plan provided you with sufficient guaranteed income for life are long gone.

And if you think contributing to your RSP alone is going to get you there … think again.

Here are the 8 NEW Fundamental Rules of Retirement Planning you need to be aware of and implement into your wealth strategy this year.

  1. Enjoy many kinds of retirement income … not just one or two.   RSPs, TFSAs, Pension Plans, Annuities, Rental Properties, Reverse Mortgage, Whole Life Insurance,  & Dividend Income to name a few.

  2. Increase access, use, and control over assets and income.   Taking a large sum from an RSP is very punitive from a tax perspective.   You have greater access, use and control over other investments such as rental properties, insurance policies and TFSAs.

  3. Continue protection strategies throughout retirement.   The old way of thinking is that you won’t need life insurance when you are older.    It is not about need.  It is about want.     Insurance that lasts as long as you do and provides tax efficient income in retirement will allow you to exhaust other retirement income sources instead of feeling the need to live below your means for fear of running out of money.

  4. Create income that is potentially more tax-efficient.   The least tax efficient income will be RSP and Pension income.    And the gov’t controls the taxes when you take the money out.   So make sure you have more tax efficient sources like insurance policies, TFSAs, and reverse mortgage options.

  5. Generate income through paydown strategies.    Paydown tax inefficient income first means you pay less tax over your lifetime.  This allows for more tax efficient incomes like TFSA, income from insurance policies, and reverse mortgages to provide tax efficient income and allow for government benefit maximization.

  6. Reduce fear of running out of money.    RSPs that have guaranteed income for life,  market performance guarantees on rsp holdings,  Reverse Mortgages that can be converted to lifetime annuity income, mortgage investments, rental income, dividend income from insurance policies or collateralize insurance policies.

  7. Diminish impact of tax law changes and market fluctuations.   RSPs are completely exposed to market volatility and worst of all … the government dictates the taxes you pay when you want to access your money.       Retirement income from alternative options such as insurance policies and rental income can mitigate these risks.

  8. Provide a legacy to your heirs or charity.       RSPs are often taxed at the highest marginal tax rate at death (with the exception of a spousal rollover).     Other assets such as the residual death benefit of an insurance policy will provide a much more tax efficient legacy.