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Invest for Life

The retirement years: 10 financial tips Add to ...

TFSAs can be used to save for a number of goals such as creating a larger estate to pass on to heirs. For example, many retirees deposit unneeded portions of minimum withdrawals from registered retirement income funds into TFSAs. Also, if there are non-registered accounts, the underwater stocks can be sold (to reduce taxes) and the proceeds deposited into TFSAs - as Mr. Pape discusses in Tax-Free Savings Accounts: A Guide to TFSAs and How They Can Make You Rich .

Investor Education: TFSAs

  • TFSA or RRSP: How to choose?
  • Note to Flaherty: TFSAs are good but they can be so much better
  • Using a TFSA can help get retirement plans on track
  • The right way to use a Tax Free Savings Account
  • Learning from TFSA's rule book

8. Estate planning

Make sure your estate is in order. Arrangements include:

  1. assigning power of attorney to a representative so your portfolio and other affairs can be managed in the event you become incapacitated;
  2. updating a will to ensure assets are disbursed as you wish upon your death;
  3. possibly setting up a testamentary or other trust;
  4. possibly paying off estate taxes and debt through a life insurance policy;
  5. minimizing probate fees through joint ownership, designation of beneficiaries;
  6. minimizing taxes at death through spousal rollover of assets, designating your spouse as a beneficiary on registered accounts;
  7. tax-efficient charitable giving via publicly-listed securities, charitable remainder trusts, bequeathing life insurance or registered plans.

An excellent reference book laying out the details of estate planning is Wealth Planning Strategies for Canadians 2010 , written by tax and estate lawyer Christine Van Cauwenberghe (who is also director of tax and estate planning at Investors Group). See Chapters 18 to 25 in the book.

9. Keep family in the loop

"Seriously consider having a family meeting or two to generally discuss what your expectations are for your aging and dying," suggests David Shymko, a financial adviser at Vancouver-based Macdonald, Shymko & Company Ltd.

People tend to avoid the difficult topics of death and money, which may later result in regret, hostility and rivalry among family members. A family dialogue can reduce the risk of negative feelings and strife, as well as help ensure an effective estate plan is in place to minimize the tax burden.

10. Gotcha: Public policy risks

The government is now very active in helping people prepare for retirement through tax-deferral plans and other programs. But the pressure to control escalating costs in government programs introduces risks such as "possible increases in taxes or reductions in entitlement benefits," warns Ken Hawkins of Weigh House Investor Services.

Retirement "should not be based on the assumption that government policy will remain unchanged forever," suggests Mr. Hawkins. A current example of a change is Finance Department proposals to amend the Canada Pension Plan to increase penalties for taking benefits before the age of 65. Such policy and regulatory changes represent another risk that some may want to hedge against.

This article is the eighth in a series on personal finance and investing at different stages of your life. As some issues may overlap the different stages of life, they could be covered in a prior or subsequent article.

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