An Overview Of The Summary Report On Retirement Income Adequacy Research

Jack M. Mintz, Research Director and Palmer Chair in Public Policy, School of Public Policy, The University of Calgary released a summary of research undertaken for the Research Working Group on Retirement Income Adequacy on December 18, 2009, which confirms that overall, the Canadian retirement income system is performing well, providing Canadians with an adequate standard of living upon retirement.

Amongst the findings in the report, it appears that Canada has one of the lowest poverty rates among elders in the OECD coutries, and that our public pension system, that is, OAS/GIS, CPP/QPP and provincial top-up programs are ensuring that low-income Canadians are able to achieve high income replacement rates, even exceeding 100 percent.

Tax-assisted saving accounts as well as transfers and pension programs have otherwise provided an adequate retirement income at all income levels for the majority of Canadians. However, the report suggests that retirement income adequacy depends not only on saving but also on the investment performance of retirement funds, and that in fact Canadians may not be well served in the retirement marketplace by their financial advisors. (See Role of Financial Intermediaries, below).

Based on recent studies, Baker and Milligan (2009) provide evidence suggesting as a rough rule of thumb that 60 percent replacement levels of pre-tax incomes are adequate to maintain expenditures. Yet:

• Low-income Canadians need a higher level of replacement income to avoid poverty.
• Some middle- and high-income Canadians may need even less than 60 percent of their pre-retirement income to sustain an adequate standard of living (for example, the OECD suggests 50 percent for individuals with incomes over $90,000 in Canada, twice the median).
• Much depends upon individual circumstances that affect personal consumption levels, including the need to support dependants, health requirements and the cost of housing and other basic necessities.

Join us next week for a discussion on the Role of Financial Intermediaries.

Educational Resources: Now is a good time to look at retirement income plans, family succession and estate plans in an attempt to better understand financial needs for a future which could certainly include tax increases on both income and capital. To learn more consider the following Educational Resources available from The Knowledge Bureau:

► Tax Efficient Retirement Income Planning

► Master Your Retirement

► Master Your Taxes

► Tax Efficient Investment Income Planning

► Master Your Real Wealth

► Master Your Investment in the Family Business

CRA has released the new rates for the simplified method for meal and vehicle expenses.

For meal expenses, the simplified rate is unchanged from 2008, a flat rate of $17 a meal or $51 per day, per person is allowed without receipts. If you choose the detailed method, you must keep your receipts.

For the simplified method of claiming vehicle expenses for trips relating to the northern residents deduction, moving expenses or medical expenses, the number of kilometres driven during the year may be multiplied by the appropriate cents/km rate below for the province in which travel begins.

If the detailed method is chosen to calculate vehicle expenses, all receipts and records for the vehicle must be kept for the expenses incurred for northern residents deduction, moving expenses or for medical expense claims.  These vehicle expenses would include operating expenses such as gas, oil, licenses, tires, insurance and maintenance or repairs.  Expenses related to the ownership of a vehicle such as depreciation and finance charges could also be included.

For more tax tips, purchase a copy of Essential Tax Facts written by The Knowledge Bureau's President, Evelyn Jacks, to learn how to ace your 2009 tax return and save money all year long. 

By Roger Currie, Guest Columnist

I have never been to Haiti, but I have no reason to doubt the claim that it is the poorest country in the western hemisphere.

In just 35 terrifying seconds last Wednesday, it was plunged into an even deeper despair by the worst earthquake in 200 years. All of a sudden this mostly forgotten land which shares an island with the Dominican Republic, became story #1 in the news cycle. "If it bleeds, it leads" is the guiding rule in many a newsroom, and this one tops them all.

Gifts can be made to:

Note: Gifts to Canada include monetary gifts made directly to the federal Debt Servicing and Reduction Account, sent to the Receiver General requesting this. A tax deductible receipt will be issued.

Meet your charitable donation goals and start receiving the best tax deduction based on your charitable giving.

Educational Resources: Take a look at Master Your Philanthropy by Nicola Elkins, to formulate a strategic plan for your charitable giving.

Discuss these milestones with your clients when doing your year end planning in order that these important deadlines are not missed.

To learn more about preparing T1 tax returns, register for Introduction to Personal Tax Preparation Services or call 1.866.953.4769 today to make an appointment for your free professional development consultation.

Current question

Should the 2010 Federal Budget extend the Home Renovation Tax Credit for one more year?

Current poll results: Yes: 92%  No: 8%   Read what other readers have to say

You're Invited To A Breakfast Seminar Presentation! You are invited to attend a breakfast to celebrate The Knowledge Bureau’s Excellence in Financial Education launch on January 28 at the Albany Club in Toronto.

7:15 am Registration of guests

7:30 am Breakfast at the Albany Club, 91 King Street East

7:45 am Introduction of Special Guests

8:00 am Comments from Evelyn Jacks: "Excellence in Financial Education a Necessity in Recovery 2010"

9:00 am Knowledge Bureau team will leave to open the Toronto Stock Exchange*

*Evelyn Jacks, President of The Knowledge Bureau, has been given the honour of ringing the bell to officially open the Toronto Stock Exchange.

The Knowledge Bureau is proud to be supplying TMX with excerpts from Evelyn’s book "Master Your Taxes" to be posted on its TMXmoney.com website. The Market Open will celebrate the launch of this new tax content.

The TSX Market Open is a ceremony conducted at the TMX Broadcast Centre to open trading on Toronto Stock Exchange and TSX Venture Exchange.

RSVP by January 22:

Marion Trapp 953-4769, 1-866-953-4769, marion@knowledgebureau.com

Retirement planning is yesterday's news. Today, advisors who want to truly serve their clients must switch to thinking of it as tax efficient retirement income planning.

"I would like to say that this is an outstanding course. I really appreciated the interactions between this course and the tax concepts that are part of my everyday toolkit. Also it is valuable for me to have some knowledge of financial planning so I can steer my tax clients in the right direction and answer planning questions as they arise.

There were quite a number of issues that were dealt with in the course that were of immediate use to me.I have had a few clients ask me about whether they should apply for CPP at 60 or wait until 65. Thanks to the course I know exactly what to tell them. Another issue is the recovery of tax on US property sales. It was nice to see the snowbird issues dealt with. These were presented as part of a larger picture but they are also stand-alones that people in my position can make immediate use of whether they are doing comprehensive retirement income planning or not." Martin Hellsten

The Knowledge Bureau's leading edge course, Tax Efficient Retirement Income Planning, is designed to provide structure and process for those interested in tax efficient retirement income planning. This course covers a holistic retirement income planning process which will result in the student acquiring the skills to do the following:

• Understand retirement readiness planning for lifestyle objectives
• Understand recent tax changes relating to personal, corporate and trust taxation, pertinent to the creation of tax-efficient retirement income planning
• Use an assessment tool around which to structure pre- and post-tax retirement income needs and discuss ongoing results: the Net Worth Statement
• Establish a long term strategic "real wealth management plan" based on needs for tax efficient income as well as after-tax capital preservation, growth and transition
• Establish action plans for a long term tax efficient retirement income planning approach around the specific phases of retirement
• Work with structures specific to planning for business owners including the distribution of funds from an operating company, holding company and family trusts in developing retirement income plans
• Understand specific retirement income planning approaches for executives
• Tax efficient strategic philanthropy will be introduced

As part of the MFA, Retirement Income Services Specialist designation, this course will provide you with skills and knowledge to position yourself as an alternative for advisors who aren't giving retirement income planning enough attention.

Evelyn Jacks’ Essential Tax Facts 2010 Edition

After the global financial meltdown, finance ministers produced financial stimulus packages to help. Now, your income tax return may be the most important financial document of your year. Tax incentives worth thousands could be yours for the taking - if you know how to file for them. 

Once again, Canada's most trusted tax author, Evelyn Jacks, has come to the rescue with over 200 quick and easy Essential Tax Facts you need to know to file your tax return to your best advantage.

Start with a complete but easy-to-read annual review of changes to your tax return. Then, take advantage of the multitude of tax deductions and credits that could save your family big money now and all year long.

Whether you take your receipts to a tax advisor or use sophisticated tax software, you need to know the Essential Tax Facts to get the job done right.

Available Now!

The MASTER YOUR ... series is written for everyday Canadians looking for sound answers—and the right questions to ask—concerning today's volatile marketplace.

Strategy. Process. Plan. Masterful Execution. Powerful Results.

Call to register: 1-866-953-4769 to inquire

Update Your Tax Knowledge!

Call to register: 1-866-953-4769 to inquire

Earn your MFA as a
Retirement Income Specialist