Tip #7: Invest your pension plans
Continuing on with out tips to retire wealthy in Canada, many Canadians tend to have a pension plan from their current employer or from previous employers. When considering the pension plan that is provided by your previous employers, don’t let the potential of your retirement fund go to waste by letting your former employers hold on to your retirement when it can be secured by you and used for investment purposes/saving. A Locked-in Retirement Account (LIRA) is what you need to secure your hard earned retirement money, and it is a way to make it easy to use your retirement fund completely tax-deferred.
Unlike the money you contribute to your own RRSP, this money must be utilized to pay for your retirement. These accounts are designed to be a steady source of income in the long run after retirement. There are certain restrictions, though. You won’t be able to cash out your LIF or LRIF in most cases. The government also establishes a minimum and maximum amount of money you can receive from your LIF or LRIF each year. However, you have some discretion over the types of investments and payments you make within this range.
Typically, you open a Locked-in Retirement Account (LIRA) after you leave an employer with a pension plan. Alternatively, some in case you might open a LIRA if your earnings may have been divided between you and your ex-spouse, in both cases that you cannot access the funds until retirement or for financial hardships. If you like, you can open this account on your own to put the money in a secure place for when you retire. You must be retired in order to use these assets, after which you must convert them into a Life Income Fund (LIF), an annuity, or a Locked-in Retirement Income Fund (LRIF).
Tip #8: Maximize your Canada Pension Plan benefits and government benefits
There are many government benefits that are out there for Canadians to receive when they retire. The most popular government benefit for retirees is the Canada Pension Plan (CPP) which is a social insurance scheme that is funded by contributions from workers, companies, and independent contractors as well as investment gains. There are a few qualifications you must meet in order to be eligible for the Canada Pension Plan, which is a social insurance policy for the benefit of the entire community. To be eligible to apply, you must make sure that you:
- Are at least one month older than 59.
- Been employed for a while in Canada
- Made at least one legitimate CPP contribution.
- Want CPP payments to start in a year
A valid CPP contribution can come from work you did while living in Canada or from money you received from a former partner after a relationship ended.
Most people tend to retire and begin their CPP at 65 years old, but you can start it as early as 59 years old. The graphic below will show you how much CPP you will receive depending on when you decide to start receiving your CPP.
There are also two other important government benefits that all Canadians should be aware of, these benefits are called the Old Age Security (OAS) and Guaranteed Income Supplement (GIS). The Old Age Security benefit is contributed to by the government and does not require individual contributions. Anyone receiving or eligible for receiving the Old Age Security (OAS) pension and whose yearly income (or combined annual income for couples) is below the maximum annual level is eligible for the GIS, which is a monthly benefit as well.
Tip #9: Protect your family and assets with life insurance
Now the final into in our tips to retire wealthy in Canada is making sure that you have a strong life insurance plan. Life insurance is a crucial feature to protecting your assets, and protecting your family. Life insurance is a must-have if you are someone who has dependents, a business, debts, or a mortgage. Although life insurance can be pricer as you age and if you have medical conditions, practically everyone is eligible for life insurance. If you are a young adult or even in your 40s life insurance policies are out there for less than $30/month depending on your health, smoking status, and other information. There are also great life insurance plans out there that can help fit your needs. If you want to see how much you might be paying for life insurance check out our quick quote calculator!
Here is a brief description of the various different types of life insurance available in Canada:
A term life insurance policy covers the insured for a predetermined amount of time, which may be 5, 10, 15, 20, 25, or 30 years. For the duration of the term, there is typically a guaranteed fixed premium that is typically less expensive than whole life insurance, and there may occasionally be options for a policy auto renewal to avoid the underwriting procedure.
Whole life insurance, also known as permanent life insurance, is a policy that lasts your entire life. It should be noted that the majority of permanent or whole life insurance plans will have a rising cash value and occasionally be paid for a small period of time before never again.
There are more categories of life insurance available within permanent life insurance, such as participating life and universal life. Visit our blog where we compare participating life and universal life insurance to learn more about these two alternatives. Although permanent life insurance is a fantastic choice, it typically costs more than term life insurance.
Simplified life insurance policies may ask a number of health-related questions, but no physical examination is necessary. Although it is typically more expensive than fully underwritten life insurance coverage, it can speed up the life insurance application process. Depending on the company, the maximum amount of coverage can reach $1 million. Simplified life insurance policies typically have no medical exams and are more tolerant of applicants with certain medical problems and lifestyles. It should be noted that every firm has its unique underwriting standards for qualifying applicants for life insurance. Therefore, a separate business may immediately approve you if, for instance, one insurance company denied you coverage due to a certain medical condition.
Guaranteed Issue life insurance won’t ask any medical-related inquiries or demand a physical. Although this kind of policy is frequently the easiest to obtain, it is also the most expensive and offers the least level of coverage. The maximum coverage amount may range from $25,000 to $50,000.
How to retire wealthy in Canada
Now that you have read our list on the best tips to retire wealthy in Canada, feel free to reach out to us for a FREE consultation about your retirement plan. Planning for retirement shouldn’t be stressful, that is why our retirement experts have compiled this list of the top 9 tips to retire wealth in Canada. Our list to ensure that you retire comfortably includes:
- Starting a Registered Retirement Savings Plan (RRSP) as soon as possible
- Maximizing the use of your Tax-Free Savings Account (TFSA)
- Finding out how much you will need yearly
- Paying off all your debts
- Knowing all of your savings options
- Making investments which will make income
- Investing your pension plans
- Maximizing your Canada Pension Plan benefits and government benefits
- Protecting your family and assets with life insurance
Let us help build you a strong retirement plan!
This concludes our list of tips to retire wealthy in Canada. If you’re thinking about setting up a strong retirement plan that can help you grow your savings and set you up for a wealthy retirement, then contact us. Our retirement experts are well versed in helping people set up strong investments. When it comes to your retirement, you want to make sure that you have a comfortable retirement in Canada, but it is not that simple and can be stressful, let up help you with the stresses of retirement planning. Contact us now!
At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to create the best solution for you and your needs. We’ve been providing expert life insurance solutions since 2007, including no medical life insurance, term life insurance, and permanent life insurance, to build the best package to give you the protection you need.
Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, ON, and service clients anywhere in British Columbia and Ontario, including areas such as Kitchener, Toronto, Kelowna and Calgary.