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It‘s been said that one of the best tax-savings tools is also one of least known, least understood, and most under-utilized financial instruments (yes, that’s the Annuity).
In particular, the prescribed annuity – which levels out your taxes, can significantly reduce it in the early retirement years, and therefore leaves more after-tax dollars in your pocket. That’s because with a RRIF or an RRSP, your total withdrawal is all taxed when you take it out.
With an annuity, part of your withdrawal is taken out of your capital, so only the earnings is taxable. So balancing your RRSPs with a non-registered annuity can leave you in a lower tax bracket than getting all your retirement income out of a pension and registered income plan.
A life annuity also has the added bonus of providing guaranteed income for life so you don’t have to worry about “out-living” your money. When this is paired with a life insurance plan, you can “spend all your savings” and still leave a gift of inheritance for your children or grandchildren.
Here are links to a few articles that explain these advantages.
Medy, also known by her “proper name” Magdalena, is a Certified Financial Planner, Designated Accountant, trained life coach and has over 20 years experience in business and financial analysis. She also coached a leadership course for several years and completed the Coaches Training Institute Co-Active Coaching program. She brings all this together in educating and empowering her clients with creative strategies to help them achieve the life they want at retirement, reach their financial goals with freedom & ease, as well as to keep more of their hard earned money through their lifetime.
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