Baby boomer wave increasing in 2011

Anyone born between 1947 and 1966 are called baby boomers.

Anyone born between 1947 and 1966 are called baby boomers.

The term baby boomer refers to people born during that period of economic prosperity following World War II.

Retirement is pending for many baby boomers.

By 2015, there will be more adults older than age 65 than children younger than 15. The demographic tide has turned.

There are some important considerations when transferring a Registered Retirement Savings Plan (RRSP) accumulation to Registered Retirement Income Funds (RRIF).

When a RRIF is set up, clients have the option to use their own age to calculate future RRIF payments, or use the age of his or her spouse or common law partner.

If you want to have a longer period of tax deferral, you can choose the age of the younger person.

The government sets the annual increasing RRIF withdrawal schedule.

If the mandatory withdrawal is not needed, these funds can be invested in the Tax-Free Savings Account (TFSA), where future income grows free of income tax.

There must be available contribution room in your TFSA.

Since this plan started in 2009, $5,000 can be allocated for each of the last three years.

A corporate class fund also allows for non-registered money to be held in a tax efficient strategy.

Naming a beneficiary on your RRIF must be done at time of the RRIF application.

If a named beneficiary is not named, the proceeds flow through your estate, and the proceeds are subject to estate settlement and costly fees.

Naming a spouse on a RRIF allows the proceeds to be transferred tax free.

Naming someone other than your spouse, the final disposition of a RRIF is included in the estate.

This results in over 40 per cent lost to taxation.

Clients age 65 or older receiving RRIF income, can claim the pension credit of $2,000 on their federal tax return.

This $2,000 credit can also be claimed on insurance GICs after age 65 when held in non-registered money.

Clients who are eligible to claim the pension credit can split the income with their spouse regardless of the spouse’s age.

This can be very effective income splitting for couples.

A double pension credit is available if both partners are over the age of 65.

You can choose to convert your RRSP to a RRIF earlier than the mandatory age of 71.

Some baby boomers may need to fund their day to day or monthly cash flow. You can use this strategy to withdraw RRSP or RRIF funds in years when your marginal tax rate is low.

I have mentioned some key tax and estate planning concepts in this article for RRIF conversions.

The average age of retirement is age 62. Use tax and estate planning strategies available to you.

Doreen Smith is a Certified Financial Planner with Capri Wealth Management and Manulife Securities Investment Services Inc. The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Investment Services Inc.

250-860-7144, ext. 114

Just Posted

Kelowna council settles on 3.6 per cent tax increase for 2018

“Safety” budget heavy on a wide-range of public safety related spending

Meningococcal disease outbreak declared in Okanagan

Five cases in last six months among 15-to-19 year-olds, including one in Coldstream

Mail bandit puts damper on Christmas in Central Okanagan

Mail Box thefts have been reported throughout the Okanagan

West Kelowna RCMP seeks to reunite stolen items to owners

Numerous personal belongings were found during a seizure

Budget 2018: Kelowna to look at monitoring downtown security cameras 24 hours per day

Potential $30,000 budget item will be discussed further over objections of the mayor

VIDEO: Average Canadian food bill to rise by $348 in 2018

Atlantic Canada and B.C. will see the most increases for consumers

Debt-to-household-income ratio rises in third quarter

Total household credit market debt grew to $2.11 trillion in the third quarter

Charges in car wash shooting stalled

Court waits for police watchdog report on Salmon Arm incident.

B.C. Mountie told to resign after texting teenage sex assault victim

RCMP documents say Const. Brian Eden sent sexually inappropriate photos to 17-year-old girl

Family doctors should learn to treat addiction, not shun patients: scientist

B.C. Centre on Substance Use’s Dr. Evan Wood said efforts underway to change addiction medicine image

Four dog deaths investigated in Cranbrook

One vet suggests a parallel to these deaths and similar ones in 2016

Province rejects Ajax mine in Kamloops

KGHM Ajax had proposed a 1,700-hectare open-pit copper and gold mine, just southwest of Kamloops

Border officers rally at B.C.’s Peace Arch

CBSA employees tire of ‘lack of respect’

FCC votes along party lines to end ‘net neutrality’

Move rolls back restrictions that keep big providers from blocking services they don’t like

Most Read