7 Facts About your RRSP You Should Know + MORE Feb 5th

Ask advisors for their top retirement savings tip and chances are you’ll hear the following: Set a goal and stick with it. Sounds simple enough, right? What they don’t tell you is that life often gets in the way of a well thought-out plan. The reality is, your financial objectives will require constant adjustments as you get older. The way twenty-somethings think of retirement will change significantly once they hit their 30s. Similarly, a 40-year-old who’s getting closer to the golden years will have different priorities than a 50- or 60-year-old who’s in the final sprint.
Complicating things further is that in today’s world of low interest rates, robo-advisors and tax-free savings accounts (TFSAs), decades-old savings rules are no longer applicable. Is the RRSP still the best long-term savings vehicle for Canadians? Hard to say. Are traditional investment firms better than these newfangled robo-advisors? It depends. Should you invest more in bonds as you age? Not necessarily…

Focus on fees
Erin Richard wonders if she’s better off buying mutual funds through the bank or a robo-advisor. For her, it’s a question of deciding between access to better service versus lower-cost funds.
Shortly after Erin Richard’s boyfriend got down on one knee and popped the big question last November, the public relations professional and her fiancé wisely had a frank discussion about money. But it wasn’t the typical talk that most twenty-somethings have, which usually revolves around whether or not to open a joint account, or how much one partner spends versus the other. Instead, the Toronto couple debated where they want to put their retirement savings: with a bank, or with one of Canada’s recently launched robo-advisors. The new automated digital advice services allow you to build a low-fee exchange-traded fund (ETF) portfolio, based on your risk tolerance and time horizon, through your computer screen.
At the moment, Erin, 29, has about $25,000 worth of GICs in an RRSP at her bank…

Now that RRSP season is in full swing, if you haven’t made your 2015 contribution, you should be making plans to look after this important financial task. The deadline is set for February 29, 2016. Before you make your decision about your contribution, here are some key facts about your RRSP you should know.

Facts About your RRSP You Should Know
1. How much can I contribute to my RRSP?
The maximum amount you can contribute for the 2015 tax year is:
18% of your “earned income” or $24,930 (whichever is less)
Plus your unused contribution room from previous years
Minus any company sponsored pension plan contributions
If you want to find out what your RRSP Contribution Limit is for 2015 just check on your “Notice of Assessment” sent to you annually from Revenue Canada after they have processed your previous year’s tax return. It will indicate the exact amount you may contribute to your RRSP for the current year. You can also find out how much you can contribute by calling Canada Revenue Agency’s Tax Information Phone Systems (TIPS) line at 1-800-267-6999 or just go on their website…

The consolidation conundrum
Eydie Wood has been a great saver her whole life, but has her investments in several different RRSPs. Would consolidating all these accounts improve her financial outlook?
Eydie Wood prides herself on her saving skills. Before retiring in 2011, the 66-year-old ex-nurse had been socking part of her paycheque away for nearly four decades and built up a nest egg that should last well into her golden years. But after that many years of savings, she’s accumulated more than just assets: Wood has three RRSP accounts with three different firms and three non-registered accounts. She wants to know how to consolidate her various accounts to make sure her various assets are all working together efficiently.
Wood’s savings journey started off like most do. When she got married in her 20s, she and her then husband wanted to save money for their futures and so they each opened an RRSP account with Investors Group. He contributed money from his earnings; she put in what she could from some part-time work while she spent most of her time raising their two daughters…