How do I build a solid retirement plan while building a better community?

Can you make retirement decisions that deliver positive financial returns and positive social returns at the same time? Good Money™ believes you can.

Here are some frequently-asked questions about retirement planning and RRSPs. The answers should help you keep your retirement plan on track, while creating a strong economy and a vibrant neighbourhood for everyone in your community.

Q: Why should I worry about retirement? It seems like such a long way away . . .
A: Maybe so, but the more you contribute in advance, the less you may need to contribute in total, thanks to the power of . By putting away some of your hard-earned money today, you’ll be taking advantage of one of the best tax-sheltering opportunities available to Canadians.

Q: But I don’t have a lot of money to contribute . . .
A: Even small RRSP contributions can make a big difference – to your retirement savings, and also to your annual tax return.

Q: How can I save for retirement—expenses and other things just seem to “come up”!
A: What you could try is paying yourself first. Set up a Pre-Authorized Contribution (PAC) plan for your RRSP. Every month, you automatically withdraw a pre-set amount from your chequing account and contribute it to your RRSP. That way, your contributions have more time to compound, and you’ll avoid having to scramble for extra cash during RRSP season.

Q: The RRSP deadline is coming soon and I’m short on cash . . . what should I do?
A: Borrowing to make your RRSP contribution can make financial sense, particularly if the deduction will generate a sizeable tax deduction—you can use your refund to pay down your loan faster. Vancity offers attractive rates on short-term RRSP loans. Learn more here.

Q: How should I invest my RRSP? 
A: Your RRSP portfolio should be well-diversified among equity*, fixed-income, cash should include different geographic areas. It can include socially responsible investments. What’s the right amount of diversification? That depends on your personal financial goals and risk tolerance. Talk to a Vancity investment professional to learn more.

Q: How can I invest responsibly?
A: Use Socially Responsible Investments (SRI) to invest in companies that are making a positive impact on the environment, social equality, and corporate responsibility.

Q: I’m looking at my RRSP documents—it says I can name an RRSP beneficiary . . . is that important?
A: In some cases, doing so could help your estate reduce probate fees and income tax. Plus, it may be easier for your beneficiaries to access the RRSP before your estate is probated.

Q: I’ve heard a lot about spousal RRSPs – what are they all about?
A: Will you have significantly more retirement income than your spouse? If so,  a spousal RRSP can help you balance your incomes in  retirement , to help reduce the total income tax you’ll pay as a couple when retired. Spousal RRSPs involve you contributing to the RRSP, but your spouse “owning” the RRSP. Depending on when you last contributed to it, withdrawals may be taxed in your spouse’s hands, not yours. And if neither of you are making your maximum RRSP contributions now, it sometimes makes sense for one  spouse (usually the higher income one) to contribute to RRSPs for both of you (partly using a spousal plan), so you get more tax savings on  your contributions.

A Vancity investment professional  can help you determine which strategy is right for you.

Q: How can my retirement portfolio make an impact in my community?
A: When you do business with us, we invest in your community: through loans, mortgages and support for emerging businesses and projects that can improve your neighbourhood socially and economically.

A Vancity investment professional can discuss a full range of retirement investments with you. Call 604-877-7000 to speak with one today.

Good Money™ is a trademark of Vancouver City Savings Credit Union.
*Credential disclosure and mutual funds disclaimer.
The response set out above is for your information only and is based on general assumptions. While our goal is to offer current, accurate and clearly expressed information, Vancity does not warrant the accuracy, adequacy or timeliness of this information. Changes to the assumptions or facts or to any applicable laws or regulations could affect the validity of this information.  The information is not intended to be investment, legal, accounting, tax or other advice and you should not rely on it without seeking the advice of professional advisors to ensure your particular circumstances are properly considered. Vancity is not responsible for loss or damage that results from reliance on this information.