If you’re like most dentists, your RRSP is the core component of your retirement saving strategy. However, government-imposed contribution limits restrict the amount you can save in an RRSP. As a result, the task of reaching your retirement savings goal with an RRSP alone can be a tricky endeavor — especially if you would like to have a relatively high retirement income.
Fortunately, your investment advisor at CDSPI Advisory Services can show you if you’re on-track toward reaching your retirement savings goals ─ and if you’re not ─ assist you in implementing strategies to help you get there, all at no cost to you.
Helping You Know Where You Stand
Your advisor can create a retirement savings “progress report” for you. Based on information you provide (such as your age, when you wish to retire, the current value of your RRSP assets and other savings you may have earmarked for retirement) your advisor will show you a projection of how much annual income you can expect in retirement, based on your current savings.
If that figure is lower than you what you expected, your advisor can suggest making changes to your RRSP that may help enhance the growth of your savings (for example, by suggesting you adjust the asset allocation of your registered plan). As well, your advisor can show you how to use other investment plans to supplement your retirement savings.
Using Additional Investment Plans to Enhance Your RRSP Savings
Beyond an RRSP, your advisor can help you set up other investment plans to supplement your retirement savings. One way is through the use of tax-free savings account (TFSA) which shelters the growth of your investments from tax. However, since tax-free savings accounts are also subject to contribution maximums, your advisor may suggest that you also use a non-registered investment plan to increase your assets for retirement. Unlike with an RRSP or TFSA, money inside a non-registered plan is not sheltered from tax. However, your advisor can help you make investment fund choices for your non-registered plan that can help minimize the effect of taxation (such as through the use of corporate class funds).
Using Your Corporation to Fund Your Retirement
If you operate your practice through a professional corporation, you may wish to use an individual pension plan (IPP) to fund your retirement. With an IPP, you can make significantly higher annual contributions for retirement than RRSPs allow — and gain higher tax savings. Your investment advisor can assist in determining if an IPP is a viable option for you, and if so, help you set up the plan.
Beyond an IPP, your investment advisor can explain other methods to tax-efficiently save for retirement through your corporation.