Tax Saving Strategies for Retirees

Paying taxes is part of life. We go through our careers handing over a percentage of our income to the government. It’s nice to think that once retirement is on the horizon, you will be able to pay less than while you were gainfully employed. Affording to retire from your job is affected by the taxes you will be required to pay. When you owe too much because of poor planning, it can cause a dent in your plans. You may not be able to afford in-home assistance from a home health aide or take vacations as you had hoped. You might even find that you have to depend on financial aid from your children, which may be a little embarrassing.

Ideas for Saving on Your Taxes in Retirement

Following is a variety of strategies that may save you taxes during your retirement years. Consult with a financial planner to see what scenario may work the best for you or your senior loved ones:

1. Consider How to Retire in a Low Tax Bracket: Based on your taxable income, you may be able to lower your tax burden by utilizing a mixture of RRSP and TFSA funds. For example, if you have a pension or RRIF, you will be fully taxed on any withdrawals. Yet, you are only partially taxed on certain types of TFSA withdrawals. Learning the best way to make withdrawals can decrease your tax liability.
2. Avoid Clawback: If you draw Guaranteed Income Supplement (GIS) funds, a percentage of the income is retained or “clawed back” for government benefits. You may be able to save on taxes if you have a lower taxable income with the right RRSP/TFSA mix and tax-efficient investments.
3. Apply Pension Splitting: This strategy takes part of a pension and splits up to 50% with a spouse. Generally, this is taking money from the high-income earner and giving it to the lower-income earner.
4. Withdrawal Income in the Right Order: Instead of withdrawing from non-tax-deferred accounts first, consider how much you have and where the assets are held. Look for the best tax efficiency in the current year and future years before making the withdrawals. You may want to look at how you can maximize government benefits like your Canada Pension Plan (CPP) and Old Age Security (OAS).

Hire Quality Help from Home Instead with Tax Savings

Make every retirement dollar count when you enlist the services of a Home Instead Etobicoke caregiver. Our team is well-trained and ready to support you or your elderly loved one with personalized care. We provide peace of mind with options for transportation to appointments, nutritious meals, light housekeeping, companionship, as well as dementia and Alzheimer's care or palliative care. We work with you to assess your own or your senior’s needs and tailor services to meet them when you contact us. Give us a call today to learn more about our home care services for seniors.

Call us at (416) 239-2200 to schedule a no-obligation, in-home consultation. Learn more about the compassionate, quality senior care we deliver, every day, to families in All Etobicoke including: Kingsway, Mimico, Long Branch, Islington, Richview, The Community of Humber Heights, Rexdale, Markland Woods