It’s a Pivotal Time?

There are some financial decisions to consider when you turn 65 and 71—a financial planner can help remove the guesswork.

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What Financial Steps Do I Take at 65?

A financial planner can show you how to take advantage of the tax, investment and estate planning strategies available to you.

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5 Questions to Ask

1.Should I Start Taking CPP Now?

Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) retirement benefits are generally paid to people 65 years or over who have contributed to the plan. You can start to receive CPP or QPP at any time now, but the longer you wait (up to age 70), the higher your monthly payment will be.

CPP and QPP retirement benefits are set up to start at age 65, but you have the option to start taking these payments early or late. If you can use the income now to create the retirement paycheque you need, there’s no penalty for starting these payments at this time. These payments are not subject to claw-back based on your income level, and you can share this income with your spouse and possibly reduce your family’s overall tax bill.

If you decide to hold off on your CPP entitlement, your payments will permanently increase by 0.7% for each month that you delay receiving CPP after age 65, up to age 70. If you’re still working, or your other retirement income sources provide you with the funds you need, it may be worth delaying your payment.
2.Should I Apply For OAS?

The amount of Old Age Security (OAS) you receive is based on how long you have lived in Canada after age 18 and may be partially or fully clawed back if you earn above a certain amount. If you are still employed or expecting other sources to offer significant income at this point of your life, you may want to postpone taking your OAS

3.Should I Convert My RRSP To A RRIF?

Your Registered Retirement Savings Plan (RRSP) may represent a significant source of income once you retire. While you can convert your RRSP to a Registered Retirement Income Fund (RRIF) at any time before you turn 71, it’s important to keep in mind that once you do, you are obligated to take a minimum payment from it every year.

If you’re able to hold off converting at this time, you may want to continue contributing to your RRSP and putting off the conversion—and your mandatory annual withdrawal.

4.What Should I Do About My Pension Plan?

If you have a pension plan through your employer, you may have several options when it comes to when you will receive the money, how much you will receive, and how your spouse and children may be affected. Understanding what your options are will help you make the best decision for your individual circumstances.

5.How Can I Save On Taxes?

When you turn 65, you can start enjoying certain tax benefits that come into play at this age. You can also continue to make use of tax advantages that will apply for the next 6 years.

  • Pension income splitting: When you are 65 or over, you can begin splitting RRIF and Life Income Fund (LIF) income to help reduce your family’s overall tax bill.
  • RRSP contributions: While you may have reached 71 and can no longer contribute to your own RRSP, if you have a younger spouse, you can contribute to their spousal RRSP to continue growing savings on a tax–deferred basis.
  • TFSA contributions: In a Tax–Free Savings Account (TFSA), all investment income and withdrawals are tax–free and do not affect your eligibility to receive government benefits such as OAS. What’s more, a TFSA can be used to shelter money that you currently don’t need—such as your entire mandatory minimum RRIF payment.

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RBC Financial Planning is a business name used by Royal Mutual Funds Inc. (RMFI). Financial planning services and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.