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The Simple Retirement Plan
Simplicity is a beautiful thing.
It’s difficult to keep things simple. Taking a complex process and making it simple is a challenging task. A lot of effort goes into making something simple.
Retirement planning is no different. It can be a difficult and complex process. With lots of estimates, plus difficult calculations, it can be overwhelming. There are multiple income sources like CPP, OAS and pensions. There are multiple accounts like RRSPs, TFSAs, LIRAs, RRIFs and LIFs.
It doesn’t need to be that difficult.
Planning for retirement when you’re young can be as simple as doing one thing. By doing this one thing year in and year out you’ll set yourself up for a solid retirement.
What is the simple retirement plan?
It’s just one thing…
Catch-Up On Your RESP Contributions and Free Government Grants
When you first have children, there is a lot going on. Sleep deprivation, diapers, crying, screaming, feeding, more diapers, cribs, car seats, more crying. It’s overwhelming. So it’s entirely understandable that making RESP contributions for your child is the last thing on your mind.
Even for someone like me, who’s a bit of a personal finance geek, opening an RESP and making contributions was the least of my concerns. For at least 12 months I put off opening an RESP.
Putting off opening an RESP for a little while is ok. But put it off too long and you may miss some free money from the government.
Here’s what you need to know about opening an RESP, making RESP contributions and catching up on the free money from the government.
Canada Child Benefit: The Hidden Tax Rate
Children are expensive. There are the obvious expenses like day care, clothing, food and diapers. Then there are the not so obvious expenses like owning a larger home or a larger car.
For low and moderate income earners, there is a special benefit called the Canada Child Benefit (CCB) that can help offset some of these expenses.
The benefit starts at a maximum of $6,500/year for each child under 6 and $5,400/year for each child between 6 and 17.
These amounts get reduced as soon as a family’s taxable income passes $30,000. For someone with two children under 6 the benefit disappears entirely once the family income crosses $207,000.
Because the child benefit gets clawed back for each incremental dollar in taxable income. It works essentially the same as a tax rate. Except its effect is slightly hidden.