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How to avoid financial burden on family during retirement

November 26th, 2014 by

Getting investments retirement-ready can reduce the need to ask your children for financial support


Most people don’t want to become a financial burden on their children after they retire, which is why many of them regularly contribute to retirement savings plans to bolster whatever state or company pensions they will receive. That’s good, but saving and investing is only part of it; people also need to be planning now to get their investments retirement-ready to maximize their income after they stop working.

If we look at how retirement trends have evolved over the last few decades, it’s easy to see why this is important.

Living longer, retiring eariler

When the Canada Pension Plan was set up in 1965, Canadians had an average life expectancy at birth of about 69 years for men and 75 for women; today, it’s 79 for men and 83 for women. But that’s only part of the story. Latest figures show that men and women who reach 65 can now expect, on average, to live until about 84 and 86 respectively.

But we’re not just living longer, we’re also retiring earlier. In 1976, the average retirement age was 65; now, it’s just over 62. That means today’s retirees probably need to stretch their retirement funds over more than 20 years, whereas someone who retired 40 years ago only needed to make those funds last for about five or six years.

Unfortunately, not every retiree has managed to put aside enough to remain financially independent, while others haven’t created a tax-efficient plan to draw upon their retirement savings, leaving many to rely on their adult children for at least part of their living expenses.

A recent TD survey found that, of the two-thirds of Canadians aged 40 to 64 who provide or expect to provide care for an aging parent or in-law, 20 percent also provide or expect to provide some financial help to them. No wonder most of the people surveyed say they don’t want to put their own children in the same situation.

The question, of course, is how best to do that…

Save the most during your peak earning years

Clearly, maximizing your retirement savings during your peak earning years is a very important part of any plan to remain financially independent. But thinking about how you will draw from your retirement funds is just as important, even if you’re still several years away from retiring.

That’s what I mean by getting your investments retirement-ready, and it’s something you should be discussing with a financial advisor so you can get the most out of those investments, including finding ways to keep taxes to a minimum.

For example, while money invested in a Retirement Savings Plan (RSP) is tax-deductible while you’re still working, it’s only tax-deferred, not tax-free. So it helps to talk to an advisor about when it makes sense to withdraw money from your non-tax-sheltered investments rather than your tax-deferred ones such as an RSP or a Registered Income Fund (RIF).

You also need to decide such things as when it’s most advantageous to convert your RSP to a RIF, bearing in mind that, when you do, you have to make a minimum annual withdrawal based on either your age or your spouse’s age. Because you have to elect whose age to use before your first RIF withdrawal and can’t change your decision once it’s made, a financial advisor can help you choose the right option, which could mean significant tax savings every year.

Additional factors

Other things to consider include how to make sure whatever additional income you get after retirement doesn’t reduce any government payments and credits you might be eligible to receive; whether you or your spouse should include any dividend income in order to minimize the tax bite; and whether to split your Canada Pension Plan benefits with your spouse if he or she has a lower income than you, again to save taxes.

By maximizing your savings during your working life, making sure those funds are invested tax-efficiently before you stop working, and having a well-thought-out plan for starting to draw from those funds once you retire, you can do a lot to increase the likelihood your money will last for the length of your retirement and eliminate the need to rely on your children for help later on.


Dave Kelly is Senior Vice President, Private Investment Advice at TD Wealth. For more information on Retirement Income Options, visit

Personal Finance

Is your parent your most trusted financial advisor?

May 6th, 2014 by

Top 5 tips to help Gen Y meet their financial goals


Canadian millennials have a difficult set of competing financial priorities such as monthly bills, paying down student loans, covering a night out and still trying to put something aside towards their savings. They also have competing sources of advice on how to balance those priorities, including their parents and peers. But as a recent TD survey discovered, only a third of Gen Y Canadians turn to a bank financial expert for help, even though those who do work with a financial advisor say they are more likely to have money left over each month to put towards their financial goals.

“Good financial habits are something everyone can develop, and for many people, that starts with learning from their parents, followed up with specialized advice that a financial expert can provide,” said Raymond Chun, Senior Vice President, Everyday Banking, Personal & Indirect Lending, TD Canada Trust. ”Parents have a lot of wisdom to pass along, but with the wide variety of financial products and services available today, it’s understandable they might not have all of the answers their children need.”

The fundamentals of personal finance, such as managing a budget, don’t change from generation to generation - it’s balancing money-in with money-out. But Chun says what can change are the economic realities facing younger Canadians, which is why they should build a strong financial routine with the right blend of professional and familial financial advice.

Casie Stewart is a 31-year-old social media specialist and blogger who recently spent five years paying off her student debt. She agrees her parents are good role models when it comes to responsible financial habits but says their specific financial advice doesn’t always apply to her situation. 

“My parents always taught me to save, but it’s difficult when you don’t have much money coming in,” she said.  “It was haunting to have debt from school and I didn’t know how to manage it.”

Casie says that’s why she also turned to a professional financial advisor for help, after explaining to her parents some of the difficulties she had saving money.

“I met with a financial advisor because I knew I needed help to turn my finances around,” she said. “I set a goal to be debt free by 30. For five years I made monthly payments and never missed one.  It was really helpful to keep that five year goal in mind, and now I’m looking at different types of financial goals.”

Chun agrees. Starting good habits from the first paycheque and talking to a financial advisor to complement the advice from parents can set the foundation for achieving short-term and long-term financial goals, he said.

Top 5 tips to help millennials meet their financial goals

  1. Document spending for a month

At the end of that month, you’ll have a much better idea of how much of your money is spent on essential items and on discretionary ones, and whether you need to cut back or allocate a maximum monthly spend in some areas. 

  1. Develop a monthly budget

Assign dollars to all ongoing essential expenses like rent, student loan repayments, groceries and entertainment.

  1. Repetition is king

Revisit and revise your budget as your financial situation evolves and as your income, lifestyle, and financial goals change. Consider setting a reminder on your smartphone to track and examine your budget each month.

  1. Save

Arrange for an automatic transfer of a set amount into a savings account each week so the money is put away before it can be spent. It’s not the amount that matters, but rather starting a good savings habit that can grow along with your income.

  1. Talk to a financial advisor

According to the survey,Gen Y Canadians who have a budget, follow it and work with a financial adviser are more likely than their peers to have money left over at the end of each month to put towards their financial goals.

For online tools to complement advice from parents and a financial advisor please visit:


About the TD Canada Do Parents Know Best Poll

TD Canada Trust commissioned Environics Research Group to conduct an online custom survey of 1,323 Gen Y Canadians within a broader sample of 6,015 Canadians aged 18 years and older. Responses were collected between February 11 and 25, 2014.