MONTREAL, Feb. 8, 2013 /CNW Telbec/ - Although the RRSP is an excellent
vehicle for reducing taxes, that is not the primary aim of this plan.
According to financial planners at Laurentian Bank, it is essentially
intended to be a means of saving for retirement.
"The RRSP is particularly pertinent within today's context," underlines
Denis L'Hostie, Senior Manager, Financial Planning. "People who long
believed that their pension plan would be sufficient saw their savings
suffer setbacks related to the economic crisis, in addition to feeling
the effects of weak returns generated by guaranteed investments. As
such, personal savings are more important than ever today in order to
avoid a potential lack of sufficient income at retirement."
In response to the ageing of the population and weak growth in the
number of workers, the Canadian government recently decided to
gradually increase the age of eligibility for the old age security
program and the guaranteed income supplement from 65 to 67. Moreover,
the population is expected to age more rapidly in Canada than in other
countries. In fact, the proportion of seniors in the Canadian
population vis-à-vis working age citizens is likely to almost double in
the next 20 years, which means that other measures aimed at increasing
the eligibility age for retirement can be anticipated as well.
Consequently, establishing clear and realistic retirement objectives
has become all the more vital.
During this RRSP season, it is important to remember that the Registered
Retirement Savings Plan was designed to meet revenue availability
objectives at the time of retirement. "The RRSP should be seen, first
and foremost, as a long-term strategic savings tool intended to provide
savers with a safety cushion for once they stop working," adds Denis
L'Hostie. "And because people's perception of retirement has changed a
lot, many individuals don't see it as a permanent stoppage any longer.
Thus, one must be ready to meet the needs posed by new lifestyles."
The best way to save is to spread out RRSP contributions throughout the
course of the year — ideally in the form of a systematic savings
program. By adopting such a methodical plan, the saver can
progressively accumulate capital and see it grow in a disciplined
fashion, while gaining the flexibility to confront different
eventualities. "In so doing, we not only increase our savings, but we
also reduce the stress associated with scrambling to find the sums to
contribute at the end of the year," concludes Mr. L'Hostie. "So the tax
saving should no longer be seen as the ultimate objective, but rather,
an added benefit that the saver can apply to their RRSP or to some
other urgent financial need."
At this time of year, in particular, it is in everyone's interest to
consult a financial advisor or planner to be familiar with the
different means of preparing strategically and effectively for
About Laurentian Bank
Laurentian Bank of Canada is a pan-Canadian banking institution that has
nearly $35 billion in balance sheet assets and $33 billion in assets
under administration. Founded in 1846, Laurentian Bank was selected in
2012 as one of the 10 winners of the Canada's Passion Capitalists
program in recognition of its sustained success through the promotion
of passion within its ranks. The Bank employs more than 4,200 people.
Recognized for its excellent service, proximity and simplicity,
Laurentian Bank serves more than one million clients in market segments
in which it holds an enviable position. In addition to occupying a
choice position among consumers in Québec, where it operates the third
largest branch network, the Bank has built a solid reputation across
Canada in the area of real estate and commercial financing thanks to
its teams working out of more than 35 offices in Ontario, Québec,
Alberta and British Columbia. Its subsidiary, B2B Bank, is a Canadian
leader in providing banking products as well as investment accounts and
services to financial advisors and brokers, while Laurentian Bank
Securities is an integrated broker, widely recognized for its expertise
and effectiveness nationwide.
SOURCE: Laurentian Bank of Canada
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