During your working years

  • Income split as much as possible, bearing in mind the marginal tax rate scale
  • Organize your savings plan today for long term income splitting in retirement
  • Make sure you have prepared your wills
  • Have the higher tax bracket spouse do the spending and lower bracket spouse do the saving
  • Remember that your retirement savings obligations aren’t finished when you make the annual RRSP contribution. So, manage your investment strategy wisely. Over a life time, the investment returns will contribute far more to your retirement life style than your savings contributions.
  • Coordinate the investment strategies of your portfolios to contribute to long term income splitting, including principles of tax-smart investing
  • Use spousal RRSP contributions to contribute to long term income splitting
  • Avoid non-sensical tax deductions, like various tax shelters
  • Dedicate time to tax and financial planning regularly
  • Pay down non deductible debt first
  • Review the adequacy and need for life, disability and critical illness insurance coverage for both of you over your working lives
  • If you start saving late in life, don’t pursue a “home run” risky investment strategy to try to catch up lost ground
  • Start education funds for your kids and invest them sensibly for long term growth
  • Create a forced savings plan to secure the saving discipline
  • Review the success and strategy of your portfolio at least annually

During your retirement years

  • Map out your incremental cash flows year-by-year until full maturity of all of your retirement incomes (usually age 70)
  • Compare these incomes at various ages to your cash needs in early, mid and late retirement
  • If there is a shortfall at any point(s), consider different ways to bridge the gap
    • Elect into early CPP for either or both of you
    • Draw down your non-sheltered investment capital before drawing on your RRSPs
    • Withdraw lump sums from your RRSPs
    • Work part time
    • Convert non-productive assets, like a recreational property, into cash and investment income
    • Consider the wisdom of converting your house asset into cash flow with a reverse mortgage
  • Carefully consider your employer’s pension income options when you retire with respect to last survivor options
  • Try not to touch your RRSP until you are required to at age 70
  • Elect the younger spouse’s age to determine your minimum RRIF payments
  • Split your CPP entitlements to improve income splitting
  • If you sell your home, or trade down to a smaller one, have the excess proceeds invested by the lower income spouse
  • If you own an unproductive asset, like a cottage, arrange that the higher income spouse owns it
  • If you have money to spare, consider helping your children with house acquisition, their RRSP contributions or education plans for their children

Estate planning

  • Simplify and consolidate your financial affairs
  • Arrange joint tenancy of assets, where appropriate
  • Create and update a list of what you own, where it is and who your advisors are
  • Organize a list of the tax costs of your taxable financial assets
  • Confirm designated beneficiaries of your RRSPs and RRIFS
  • Review your wills
  • Select your executors wisely
  • Don’t procrastinate!