With 2018 coming to an end, you may be taking time to reflect on the past year and considering a list of New Year’s goals for the upcoming year. Seeking financial advice, reassessing finances, and implementing new financial goals are often at the top of the list for our clients at Osoyoos Credit Union.
One of the most common questions we hear our clients ask their financial advisor at Osoyoos Credit Union is whether they should contribute to a TFSA or invest in an RRSP. We recommend learning more about the benefits of an RRSP investment and TSFA investment options if one of your New Year’s goals is investing in your future and preparing for your retirement.
Financial Advice: Planning for Your Retirement
The sooner you get started, the better. Take Ariane for instance, Ariane is a young professional in her late 20s. Her five-year goals include moving up in her current professional position, buying a home, and investing in her retirement.
When Ariane came to Osoyoos Credit Union, we worked closely with her to build a retirement plan, customized to her needs and goals. Through the process, we created an appropriate timeframe for Ariane, then monitored and evaluated each of the financial strategies based on her goals, needs and priorities. Once that we’d determined the best financial advice and strategies based on Ariane’s financial situation, we periodically review and assess her progress. As time passes, her current situation may change, which may require clarifying her goals and priorities to determine and discuss any necessary revisions to her RRSP investment and retirement plan.
If you’re in a similar situation as Ariane and seeking financial advice for your retirement, a financial advisor at Osoyoos Credit Union will guide you ‘to and through’ retirement, by reviewing and making recommendations in your personal retirement plans. This can include setting up or review existing RRSP, suggesting alternatives to increase your income during retirement, guiding you on ways to fund health care in retirement and monitoring your plan. Our goal is to help you convert your investments to ensure you can retire comfortably.
Both TFSAs and RRSPs offer tax advantages that can help you achieve your savings goals. If you can afford it, a good strategy is to contribute as much as you can to both. But if are choosing one over the other, understand how they differ. And then make your choice based on your own individual financial and tax situation.
Registered Retirement Savings Plans (RRSPs) are government-registered plans designed to save for your retirement years. Some of the advantages of an RRSP contribution include paying less income tax because the money you contribute to your RRSP investment, and the interest earned, is tax-sheltered until withdrawn. This means faster growth for retirement savings because the earned interest compounds without erosion from income tax.
If you earn an income of $100,000 and your RRSP contribution is $10,000 throughout the year, you’ll be taxed at the 90,000$ income bracket that year. RRSP withdrawal rules indicate that when you withdraw
it the funds, they will be taxed like income. You will be taxed at a lower tax rate if your income is lower at retirement than during your working years. Maximizing your annual RRSP contribution limit will provide you with the greatest benefits, both short-term and long-term.
Your RRSP investment should be reserved for retirement, purchasing your first home, or full-time school tuition. If you are saving for anything else, including children, travel, home renovations or debt, an RRSP will not support these goals.
Considering an RRSP investment is an exceptional choice as they are flexible enough to meet any of the above financial investment goals.
TSFA Investment Options
Another option is a TFSA (Tax Free Savings Account). TSFA investment options offer clients a simpler tool that allows investments to grow tax-free. However, a TSFA contribution will not provide you with the tax-deduction benefits like your RRSP investment. A high interest TSFA is ideal for more immediate financial goal, but can be used for retirement in certain cases. Depending on your current income, your future income expectations, and overall financial goals, we may recommend a TSFA contribution for your individual circumstances.
At Osoyoos Credit Union, your financial advisor will work with you and take the time to fully understand your financial goals before recommending the best retirement plan for. Typically, your TSFA contribution is ideal if you’re saving for something big, but more immediate than your retirement such as a home, wedding, vacation or car.
Your Osoyoos Credit Union Financial Advisor
It’s never too late to achieve your financial investment goals. At Osoyoos Credit Union we are a community-based, member-owned and governed organization. That means your financial advisor will work with you and carefully evaluate your individual financial circumstances to achieve the best financial plan for you.
Our aim is to provide our members with competitive products, professional personal service and expert financial advice to ensure you make the best and most informed financial decisions.
When it comes to your financial needs, whether it is for retirement, estate, investment, education or tax planning, an Osoyoos Credit Union financial advisor can review your existing investments, with no obligation. Tell us a little about yourself and your goals and decide how much you want to invest. We strive to create a community within our institution, which means we work with you to develop a tailor-made plan to achieve your financial goals.