Those in Ontario who are concerned about their financial futures may have Registered Retirement Savings Plans, tax-deferred accounts that help them put back money for their later years.
However, account holders may not contribute to those plans once they reach the last day of the year in which they turn 71. It is crucial for those approaching that age to know and understand their estate planning options and take steps to protect the funds they have worked long and hard to accumulate.
Most commonly, those with RRSPs will convert those plans to registered retirement income funds. Retired individuals must make minimum withdrawals from these accounts beginning at age 72, when the mandated minimum is 5.28% and increases slightly in the following years.
Other options for financial planning for those over 70 include any of the following:
- Tax-free savings accounts, which are especially good for those who have a windfall, such as an inheritance
- Adding children as owners of certain assets, such as investments, real estate and bank accounts
- Naming beneficiaries for RRSPs, RRISs and other similar accounts
- Changing the level of risk in one’s investments
- Seeking professional help to protect their assets from exploitation
- Providing some liquid assets in one’s estate to cover the death tax
- Placing assets in revocable trusts
Reaching this milestone of turning 70 may bring many emotions. However, it also brings more opportunities to provide a solid plan for oneself and one’s family through careful estate planning. Taking such steps in a timely manner often provides peace of mind, which may allow more time for enjoying friends and loved ones.