Taxes,Taxes,Taxes; all we hear about, see and feel are taxes of every shape size. Some are more palatable than others. While annoying some are small so not worth fighting about like HST, GST PST. Some, like unrealized capital gains or investment growth in an RRSP or RRIF are deferred so not an immediate worry. For many, the cottage is really not an investment, but a generational heirloom, not intended to be sold for profit, but passed onto the kids. The Government doesn’t quite see it that way.

RRSP and RRIFs are tax shelters. The tax on RRSP and RRIF income is also deferred. Notice I said deferred, not eliminated. It is taxed as you remove it from the tax shelter and use it. But what is you don’t use it up. Most thing of the residue in a RRIF as gifts to the kids. Well, think again.

All deferred taxes come due at some point. The point at which most come due is at death. Often this is a very hefty amount. Often approaching 50% of the residue pot of assets. So either you come up with the tax from the assets in the estate, which often means liquidating assets., or you let someone else pay the tax and keep the estate whole.

Check out the details at The "RRIF Raft" - Leaves It In The Family

It is a well known fact that putting your money into a savings vehicle at the beginning of the year is more fruitful than at the end. Likewise it is better to accumulate your savings monthly in advance than annually in arrears. There is one additional advantage to systematically monthly over annually. It is called Dollar Cost Averaging.

Market values are constantly changing, one they are up another day they are down.  The chart illustrates the point for a $12,000 investment one made on January 1 and the other spread over four quarters of $3,000 each. the investment is made into a mutual fund or segregated fund.

See Chart at  www.9dots99.com

Steve

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There is a technique called pension maximization to improve the situation. Pension maximization concept has two components, first, the pensioner chooses the highest payment option [the one that guarantees an income for life of the pensioner but not his spouse] and second, finances the income of the surviving spouse with a life insurance policy. Detailed explanation can be found at http://9dots99.com/CSIA/retirement-income/pension-max.html

Steve Szenasi