Canadian residents receiving pension have good news when it comes to tax time. You can now disperse portions of pension earnings to some one else, say your spouse, allowing these funds to be taxed less if they are in a lower tax bracket than you are. Not every pension plan is available to be split in this way, but it is very helpful for many. You must either be part of a common law partnership, or married to the person that you allocate your funds to for this system to work. This is great news for many, because a fixed income does not fix much, especially when you have to pay a higher tax rate.
Both you and the individual that you choose to receive a portion of your retirement earnings have some paperwork to do in order to utilize this tax break. You need to fill out forms together and sign them together, including Form T1032, Joint Election to Split Pension Income. Some of these form lines will be different for the two of you. Having a conversation with a tax preparation expert can help you plan this out to benefit you the most when it comes to tax season. Saving money on taxes is always great to keep what you earned for yourself.
In Canada, more and more retirees and those over 65 years old aren’t able to enjoy their golden years of retirement. Instead of having a financially stable portfolio, these people are the largest group who are insolvent, according to the non-profit organization Vanier Institute for the Family.
Comparing the figures from 2010 and 1990, the non-profit found out that retirees during both periods shared the same disappointing fate when it comes to bankruptcy. The even more unfortunate fact is that these figures may point out to even more people who may be insolvent when they retire a few years from now.
This year is the most crucial period for financial analysts as this marks the first group of Baby Boomers entering into their retirement years. This group comprises almost 400,000 Canadians who were born in 1947 and enjoyed positive economic growth during their childhood years, directly after World War II. That year also marked the start of an upward trend in Canadian births, peaking in 1959 with almost 500,000 babies born that year.
The implication in 2012 is that, demographically speaking, there are now more seniors in Canada than any other time in almost 100 years. Those that were supposed to enjoy their retirement packages are now looking at a bleak outcome. To add insult to injury, this trend will only worsen in the next decade as more Baby Boomers enter their retirement years.