You probably aren’t minimizing your taxes and maximizing your retirement income if you are like most people. Even though every situation is unique for a retiree, it doesn’t hurt to get some advice now and then. Here’s a list of the top 5 things one should consider to make the most of retirement income plans.
Spread out income – It would be wise to spread your retirement income over some years rather than having low income in later/earlier years and higher income in others. This could be made possible by earlier withdrawals from RRSP and filling it up later down the line. You can keep yourself in lower tax brackets by trying to evenly spread out income. In addition, qualify for more benefits, government credits and on death lower the tax bill on your estate.
Splitting your income – Income splitting rules previously known as the tax cut were cut off by the federal government currently in power. This led many retirees to think that pension income splitting rules were as well on the chopping board. Seeing as this has not been cut off, one should take full advantage.
You can split received income from LIF, RRIF and any other qualifying pensions as well if you are over the age of 65. Retirees under the age of 65 have qualifying income options that are more restricted.
Claim your credits – When your net income is above $37,790, and you are at least 65 years old, though it will be reduced you can claim the non-refundable age tax credit. Another non-refundable credit is available for retirees over the age of 65. On the first $2,000 of eligible income, 15% is available. This includes RRIF, RPP, some GIC sources, and LIF.
To properly enjoy the retirement, you have toiled hard for and that you well deserve to make sure plans for your retirement are as efficient as can be.