What should be the ultimate goal of tax planning in retirement years for Canadians? Minimise
tax on your retirement income! But you do not have to do it alone as an insurance company can
help you with tax planning in retirement years. For your knowledge, we have shared some
strategies to include in tax planning in your retirement years.
Reducing or Deferring the Tax You Owe
You can select from one of the following strategies to reduce or defer some of the taxes you
need to pay:
Pension Income Splitting – You and your partner (spouse or common in law partner)
can decide to split your retirement pension.
Interest Expenses and Carrying Charges – You can claim interest expenses and carrying
charges you paid to earn an income from the investments you made.
Registered Retirement Savings Plan (RRSP) – You will not need to pay taxes on the
income you earn through the RRSP, until you withdraw the money.
Federal Deductions, Credits, and Expenses – Non-refundable tax credits can reduce the
amount of income tax you owe.
There may be other ways than these to reduce or defer the amount of taxes you need to pay to the
Government of Canada. Instead of going about it alone, you can hire the services of an experienced and
reputable brokerage firm to assist you with tax andretirement planning during your retirement years.
A Strategy to Reduce Tax on Your Retirement Income
You can reduce the amount of tax you have to pay on your retirement income by using the following this
Retire in a Low Bracket with RRSP and TFSA
The amount of your retirement income influences your taxable income. You need to retire in a low
bracket by having right combination of fully taxable income, low tax income, and tax-free income. The
government will tax your retirement pension, RRIF withdrawals, and interest.
However, they will charge you partially on tax-efficient, non-registered investments, but nothing from
the money you withdraw from the TFSA.
How Much Should Your Taxable Income Be?
Aim for having a taxable income under $46,000 regardless of the amount of money you receive, as this
is the lowest tax bracket. If you can, try having a taxable income below $25,000. This is for one person. If
you are married, it should be below $37,000.
If you have a low income and you receive a retirement pension from the Old Age Security (OAS), a non-
taxable income, each month, you can opt for the tax-free Guaranteed Income Supplement (GIS).
We imagine this can be a little confusing for seniors. Seniors can eliminate the confusion by engaging
the services of an insurance company, well-versed in tax and retirement planning for seniors during their
retirement years. You do not want to pay a lot of taxes on the money you save in your investment
vehicles, which is why you can benefit from having experts at tax planning helping you plan your
retirement years better.
There is no room for mistakes when you contact a brokerage firm to help you make your retirement
years easier and more comfortable.