Make retirement savings last
Many people are so afraid they’ll outlive their savings that they hang onto every penny. Don’t. You’ll add unnecessary stress to your life, your money won’t grow and the taxman will get most of it. Instead, talk to a financial advisor who specializes in retirement planning to make your money go further and grow over time.
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Top 10 money-saving strategies:
1. Purchase an annuity: When you turn 71 and have to decide what to do with your RRSP, consider using some of it to buy an annuity. An annuity will give you regular payments for the rest of your life; a joint life annuity will do the same for you and your spouse. Payments are usually monthly and are influenced by interest rates, the amount you originally invested and the terms of the contract. Remember, annuities are tax-efficient and they never run out.
2. Buy shares: Buy shares in high-quality growth stocks, invest regularly and be sure to diversify so that you reduce your risk.
3. Purchase long-term care insurance: Long-term care insurance will save you considerable expense if you are faced with a chronic illness or disability in the future and cannot take care of yourself. The benefits are tax-free and they include health and personal care assistance.
4. Claim home renovation costs: If you’re planning to move to a retirement residence but you’re not quite ready, consider upgrading your home so that you are more comfortable living there now. Look into The Home Adaptations for Seniors’ Independence (HASI) program at www.schl.ca/en/ab/noho/noho_006.cfm. You can write off the costs of many upgrades such as hallway handrails, accessible kitchen storage space and grab bars in the bathroom.
5. Limit gambling: Going to the casino may be fun but limit your outings to once a month. It can become addictive and it’s a terrible drain on your savings. Set a cap on how much you’ll gamble before you leave home – and stick to it.
6. Claim tax deductions: If you live in a retirement community or long-term care facility you can claim attendant care costs and if you have a long-term disability you can qualify for a disability tax credit which can be transferred to your spouse.
7. Start a home business: Once you’re making money you can write off many things in your home as business expenses. Think about employing your spouse and remember that if you’re self-employed you can purchase a customized, tax-deductible health plan.
8. Split CPP Income: Keep taxes down by splitting your Canada CPP income between you and your spouse.
9. Reduce bank charges: Get a no-fee seniors bank account, pay your bills online and use only your bank’s ATM. Check out credit unions too as they usually have better rates.
10. Look for seniors discounts: Take advantage of every discount you can, from reduced airline and Via Rail ticket prices to pharmacy costs. Don’t forget to get cash back when you use your debit card to buy the groceries.