Retirement plans, what are the different possibilities?

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You would like to join a retirement plan, but do not know where to start and you want to better understand the different options available:

  • Fixed contribution pension schemes for which the contributions are set in advance. Your pension will depend on the accumulated sums and the rates at the time of your retirement. You will have to bear the costs of any fluctuations.
  • Fixed Benefit schemes for which you already know your pension allowance (but please note that they are fewer and fewer). Your pension will be a percentage of your salary multiplied by the number of years worked.
  • Simplified Pension Plan. You monitor how to invest your contributions (e.g depending on the risks you are willing to take and your objectives, you can have a moderate or bold portfolio). Contributions are set in advance and you will have to bear the costs of possible fluctuations.
  • Voluntary retirement savings scheme available to anyone, either workers who never subscribed to a retirement plan, or self-employed workers. Affiliation is compulsory (you can however sign a waiver in the first 30 days). All you need is to choose a scheme registered with Retraite Québec. This type of plan is both affordable and easy, and just like the RRSP, the deposits are deductible from your income tax.
  • RRSP (Registered Retirement Savings Plan) enables you to make regular tax-free deposits, hence build up a capital for your retirement. Just remember that when amounts are withdrawn, they are taxable.

This type of plan is attractive for young people since it allows first-time homebuyers to use RRSP funds to purchase a home.

The types of eligible investments are varied and numerous. The important thing is to invest according to your profile (moderate, bold, etc.).

  • Tax-Free Savings Account (TFSA)You can contribute a maximum of 6000$ each year. The deposits made are not tax deductible, but the interests are tax-free, even when withdrawals are made.

All the accumulated sums of money are tax-free for as long as there is no withdrawal. If needed, you can use them for the HBP (Home Buyer’s Plan) or the LLP (Lifelong Learning Plan).

There are, of course, other ways to save for your retirement (life insurance, real estate investment ), but it is also true that it is sometimes difficult to save money either because you still have debts, or plan to buy a property, or simply because you have the children studies to pay for…But once again, just like for many other things, the key is to set goals and establish a plan to find the motivation to do so. This article is intended to provide you with general information. For further details do not hesitate to contact us. We will be happy to guide you and answer any questions you might have.


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