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Jean-Pierre and Sharon are ready for the next step of their wealth journey – retirement. Find out how consolidating their assets and a custom financial plan helped this family feel secure and excited about their new life.
When it comes to maintaining a comfortable retirement, income could be an important part of your plan. With expert advice and smart solutions, you can convert your nest egg into regular, tax-efficient retirement income.
Watch this video to learn about several strategies for generating regular income while managing risk.
View transcript
If you're retired, you know firsthand how difficult it can be to get a satisfying retirement income.
Traditional retirement Investments Like GICs and bonds continue to pay very low interest after taxes and inflation there can be very little left over.
What's more people are living longer so they need their retirement savings to last longer too.
So what can you do to maximize your after tax retirement income without taking on too much risk?
Here are a few ideas.
First, get the most out of your interest paying investments with a GIC or bond ladder.
For example, with a 5-year Bond ladder you invest equal amounts in a 1, 2, 3, 4 and 5 year bond.
Now as each bond matures you reinvest in a new five-year bond. At the end of five years you hold only five year bonds.
The advantage?
Longer-term bonds historically pay higher interest than shorter term bonds.
Second, look at other investments that pay higher income.
Some options include corporate bonds, insurance company guaranteed investments, and dividend paying stocks.
They all have higher risk than traditional GICs and government bonds, to varying degrees, but you can reduce the risk through diversification.
The key is to find the right balance between higher income and lower risk based on your individual situation.
Third, consider how different investments are taxed in your regular non-registered accounts.
For example, dividends from Canadian corporations enjoy tax advantages while interest from GICs and bonds are fully taxable.
Sticking with the tax theme, also consider income splitting with your spouse to enhance your combined after-tax income.
With this strategy you transfer income from the higher-income spouse to the lower-income spouse so your combined tax rate is lower.
You can split up to 50% of your eligible pension income like RIF income with your spouse.
You can also split income with a spousal RSP or a spousal loan strategy.
These are just a few ideas for enhancing your retirement income.
If you would like more ideas specific to your situation, I invite you to contact an RBC Wealth Management advisor.
If you are approaching retirement, or have recently retired, there are several financial items you need to check off your list. To help you keep track of all the critical details, and ensure you’re ready for a successful retirement, check out our Retirement Checklist.
It can help you:
Contact us for a free copy of the Retirement Checklist.