Home Buying

Should I rent or buy a home? The benefit of homeownership lies in the fact that your equity in the property will increase over time as the mortgage is paid down. That, combined with regular appreciation in the value of the property, could leave you with a valuable investment after the mortgage is paid off.

In contrast, renting over the same amount of time gives you no equity in the property. From an investment point of view, however, homeownership might not always be the right decision. When comparing owning to renting, it’s a numbers game: you have to add up all of the figures, including the cost of your home, the size of your down payment, utilities, repairs, interest rates and insurance, and compare them to how much you are currently spending on rent.

Of course, you also have to place a value on the enjoyment and satisfaction that you will derive from owning your own home.

Find out more:

Affordability and Debt Load

To determine affordability, financial institutions use two simple calculations:

The GDS looks at your gross monthly income vs. your proposed new housing costs (mortgage payments, taxes, heating costs and 50% of condominium fees, if applicable). Generally speaking, your GDS ratio should not be higher than 32%. For example, if your gross monthly income is $4,000, you should not be spending more than $1,280 in monthly housing expenses.

The TDS ratio measures your gross monthly income vs. your total debt obligations (including loans, car payments and credit card bills). Generally speaking, your TDS ratio should not be higher than 37%. Keep in mind that these numbers are prescribed maximums and that you should strive for lower ratios for a more affordable lifestyle.

Here are a few other things to consider…

Before buying a home, you should create a detailed budget and calculate your debt-service ratios. As a rule of thumb, a home purchase should cost less than two and a half years’ worth of your income. To calculate how much you can reasonably afford to pay for a home, start by adding up your household’s gross annual income (salaries, wages and taxable income before taxes).

Then multiply the sum by 2.5 (assuming an 8.5% mortgage interest rate).

For example, a household with an annual income of $60,000 can reasonably afford a $150,000 home.

Your Downpayment Options

Probably the most difficult challenge you will face as an aspiring homeowner is saving enough for a down payment. Keep in mind that the more money you can put down, the less you will pay in the long run due to lower mortgage interest costs.

In order to obtain a conventional mortgage, homeowners are required to pay at least 25% of the purchase price or appraised value (whichever is less) as a down payment. Programs are in place to assist people with the challenge of saving for a down payment.

Below are two options to consider.

1) Getting a Mortgage

Start with a mortgage pre-qualification meeting and be sure to determine not only the cost of your mortgage but also other expenditures such as closing costs. A good rule of thumb is to budget about 2% of the purchase price of the home for closing costs, including land transfer tax, legal fees and other disbursements.

People who buy new homes from builders also pay 7% GST, which is often included in the purchase price. Once the mortgage is pre-approved, the interest rate is frozen for 60 days (90 days on new-home construction). If interest rates drop, home buyers get the lower rate, but if they rise, the home buyer still receives the frozen rate. There is no obligation to actually obtain a mortgage through the institution that pre-qualifies you.

Pre-qualification is a service offered at no cost. You can continue to roll over your pre-qualification certificate if you don’t find a home within the 60-90 day timeframe.

2) CHMC 5% Down Payment Option

Mortgage insurers such as Canada Mortgage and Housing Corporation (CMHC) and Genworth Canada may insure your mortgage against default for up to 95% of the lending value of the house. Therefore, as a purchaser, you only need a 5% downpayment. Eligible borrowers include anyone who buys a home in Canada and intends to occupy it as his/her principal residence.

A few things to be aware of when considering mortgage insurance…

Purchasers can use up to 35% of their gross family income for payments of mortgage principal and interest, property taxes and heating. A buyer’s total debt load (including consumer loans, etc.) cannot exceed 40% of gross family income.

If you insure a mortgage loan with CMHC or Genworth, you will pay an application fee and a premium. The application fee ($75 – $235) covers the costs incurred by the insurer to review the application.

The premium is based on the loan amount. Premiums range from 0.5% to 3.75% of the mortgage loan amount and can be added to the principal amount of the mortgage.

Home Buyers’ Plan

The Home Buyers’ Plan (HBP) allows first-time homebuyers to withdraw up to $35,000 from their RRSPs towards the purchase of a home. The withdrawn amount must be repaid within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn.

If you don’t repay the amount due in a particular year, it gets included as income for that year. Visit Canada.ca to learn more.

Why Open an RDSP?

The Registered Disability Savings Plan (RDSP) was established by the federal government to help parents and others save for the long-term financial security of a person with a disability (one who qualifies for the Disability Tax Credit).

Benefits of an RDSP Account:

A big advantage of RDSPs is that, like RRSPs, they allow your money to grow tax-free. Plus, the beneficiary of the account will not pay tax on earnings until the funds are withdrawn. That could add up to a lot of savings.

As the beneficiary of an RDSP, you can access your money two ways — annual payments or periodic lump-sum withdrawals.

Also, if you save your money in an RDSP, you’re still eligible for other programs. Income payments from RDSPs don’t affect Old Age Security, Guaranteed Income Supplement and the Canada Pension Plan, and in most provinces and territories, you’ll still qualify for existing provincial social assistance programs.

The total lifetime contribution for each beneficiary is $200,000, with no annual contribution limits.

If a parent or grandparent passes away and has a financially dependent child or grandchild, they can transfer up to $200,000 of their RRSP/RRIF or RPP to the dependent’s RDSP on a tax-deferred basis.

If you have an RRSP and are thinking about going back to school, you can help fund your education by borrowing from your RRSP with the LLP option. Whether you want to enhance your existing credentials or embrace a new career, the Registered Retirement Savings Plan Lifelong Learning Plan (RRSP LLP) can help you pay for the education or training you need.

With the LLP you can withdraw up to $10,000 per year to a maximum of $20,000 tax-free from your RRSP for you or your spouse to pay for a full-time program (or a part-time program, if the student is disabled). But keep in mind that you can’t use the program to finance your children’s post-secondary education — that’s the function of the Registered Education Savings Plan (RESP).

Whether the program you select is considered full-time depends on how the educational institution you are enrolled at characterizes your participation. However, because you can take courses by correspondence or through a distance education program, you could conceivably be deemed a full-time student even if you continue to work full- or part-time.

Paying back your RRSP

You have up to 10 years to repay your RRSPs under the LLP. Typically, you must repay 10% of the total you withdrew each year until you have repaid the full amount. You do not have to pay any interest on the money you withdrew.

The Canada Revenue Agency (CRA) will send you an LLP Statement of Account each year, showing your LLP withdrawals, how much you have repaid so far, how much you still owe and how much you have to repay the next year. The deadline to start repaying your RRSP under LLP depends on how long the CRA considers you a full-time student.

For example, if you made an LLP withdrawal any time in 2010, and you qualified for the education amount (a tax deduction) every year since, you have until March 1, 2015 to make your first repayment installment — 60 days following the fifth year after your first LLP withdrawal. That’s the longest deadline. If you’re like most people, however, you won’t be eligible for the education amount for the full five years, so your repayment period will start sooner. (For more information, see the CRA rules for when and how to make a repayment.)

If you miss repaying the required installment in any year, you will have to pay taxes on that amount. You can keep withdrawing money from your RRSP until the January of the fourth calendar year after your first LLP withdrawal, as long as you are still a full-time student (or part-time student, if you are disabled) and you have not exceeded the $20,000 maximum or the 10-year repayment period has not begun.

You can participate in the program as many times as you wish over your lifetime, provided you have fully paid back previous LLP withdrawals. You can also participate in the LLP at the same time as your spouse; if you do so, the family withdrawal maximum will total $40,000.

Can you combine an LLP withdrawal with the Home Buyers’ Plan?

LLP withdrawals are also permitted if you have previously pulled money out of your RRSP under the Home Buyers’ Plan and haven’t yet fully repaid it. If you do not have an RRSP, you cannot set one up and then withdraw from it immediately.

Your contribution must be in the RRSP for 90 days before you can deduct it from the income on your tax return. You can continue to make contributions to your RRSP and deduct them from your income on your tax return after you have made an LLP withdrawal.

However, you may not be able to deduct contributions you made before the withdrawal. For further details, see the CRA rules on Effect of LLP on RRSP deductions. In a 2006 report (Canada’s retirement income programs), Statistics Canada found that in the first few years since LLPs were introduced in 1999, they were not particularly popular.

Until the end of the 2004 tax year, only 49,000 individuals took part, withdrawing close to $363 million from their RRSPs. Compare this to the nearly 1.4 million holders of RRSPs aged 25 to 64 who cashed in all or part of their RRSP savings between 1992 and 2004 under the RRSP Home Buyers’ Plan.

Alternatives to LLP

One of the reasons the LLP program may not have attracted many takers is that if you’re unemployed with little or no income in the year you go back to school, you can simply make a regular withdrawal from your RRSP with negligible tax implications.

And unlike an LLP withdrawal, a regular withdrawal does not have to be paid back. Also, with the availability of tax-free savings accounts (TFSAs) since 2009, people may prefer to use TFSA money for education costs, because the funds can be withdrawn tax-free and the contribution room freed up and carried forward.

Furthermore, there are no penalties or taxes if the money is not replaced in the account. Whether it makes sense for you to use the RRSP LLP will depend on how much you have in your RRSP, whether you have TFSA savings and how much you are still earning when you go back to school.

Your financial advisor can run the numbers to help you develop a personalized, tax-effective approach for financing your planned course of study.

Here’s where we can help!

Did you know that we can assist you in obtaining a mortgage? Whether you’re a first-time homebuyer or a homeowner renewing an existing mortgage, our mortgage specialists can help you decide on the mortgage and debt solution that is best for you. Get in touch - we’re here to help.

Rightsizing your home is just that — making your home fit your lifestyle. Not the other way around.

Maybe your financial situation has improved, and you want more space for your growing family. Or, perhaps, your kids have flown the nest and you’re ready for a smaller home. Whatever the case, you need to feel comfortable in your environment.

Downsizing your home when the time is right can also be part of your financial plan. Many homeowners arrive at a point when it makes sense to sell their existing home, purchase a less expensive house or condo and put the savings into investments for their retirement years.

With a smaller home, you’ll also typically pay less in property taxes, utility bills and maintenance costs.

Where to start

The rightsizing process should begin with a review of the rooms in your house and how they’re being used. Questions to ask include:

In the end, you know what’s best for you and your family. By rightsizing your home, you’re able to leave behind the past and focus on the road ahead.

The flooding that occurs when a body of water, such as a river, overflows onto dry land is known as overland flooding. Across Canada in recent years, the incidence of this type of flooding causing damage to family homes has been increasing.

Indeed, according to a report by the Intact Centre on Climate Adaptation at the University of Waterloo, basement flooding has emerged as the biggest climate change-related cost Canadians are currently dealing with.
Flood Consequences

For individual homeowners, the consequences can be devastating. Last year, the Insurance Bureau of Canada estimated that the average cost to repair and remediate a flooded basement was $43,000. We urge you to check your home insurance policy to determine whether it protects against overland flood damage.

Most policies offer protection against things like sewer backups and burst pipes, but not overland flood damage. You may need to purchase a separate insurance policy to ensure you have protection against overland flooding.

As always, we’re here to help. Call us if we can be of any assistance.

April 2022

It’s quite easy to end up with investments in different places. You might have joined a group Registered Retirement Savings Plan (RRSP) through an employer. Or opened a Registered Education Savings Plan (RESP) or Tax-Free Savings Account (TFSA) at a bank. It could be other investments too, like a Guaranteed Investment Certificate (GIC).

This is where spring cleaning enters the picture. It’s difficult to make your investments work together when they’re scattered in different places. You may want to clean up by putting them all under one roof.

The consolidation solution

When you consolidate all your investments with me, you benefit in a variety of ways. First, you’re better able to ensure your assets are appropriately diversified, which minimizes risk, maximizes potential returns and smooths-out performance.

Also, you’re better positioned to re-allocate your investments among registered and non-registered accounts to make them more tax-efficient. Another possible tax advantage is having fewer tax slips to manage when filing your return.

View your investments at a glance

With scattered investments, trying to monitor everything can be cumbersome. But when you have a consolidated statement, viewing your investments is clear and easy – and you save time. It’s also a more efficient way for us to help you. We can ensure your investments are aligned with your goals and recommend changes as your needs evolve.

Review your financial plan

A good financial spring cleaning should also include a comprehensive review of your financial plan and, if your financial circumstances have changed, the updating of your goals. Ideally, you should write down your financial plan and review it at least once a year, as this ensures you always have a clear roadmap for making financial decisions.

If you don’t have a written financial plan, now is a great time to get started. An effective plan will state your short-term and long-term savings goals and define how you may need to change your financial habits to realize your goals. By writing down your goals, you’ll create a detailed picture in your mind of what you’re trying to achieve, giving you greater motivation and focus.

Do a personal retirement gap analysis

When planning for retirement, it’s essential to determine where you stand today and what your life will look like in retirement.

A gap analysis is a financial planning exercise that can help identify any shortfalls in your financial situation or your strategy for reaching your retirement goals.

A gap exists when a shortfall is predicted between your income and expenses.

It’s only after you’ve conducted a retirement gap analysis and fixed all the gaps that you can be confident in reaching your retirement goals.

Here’s where we can help!

We prepare and then review a comprehensive plan to help you reach your goals. As part of this process, we can assist you in consolidating all your investments so they’re easier to manage and work more effectively for you. We then help you decide on the best options for investing and building your portfolio.

Get started by using our RRSP calculator to estimate how much your registered retirement savings plan (RRSP) will be worth at retirement.

July 2022

Are you contemplating a career transition? You’re not alone. The COVID-19 pandemic has changed how many of us think about work. We’re placing more importance than ever on work-life balance and rethinking what we hope to achieve in our careers.

But changing jobs is a big deal, whether in the middle of your earning years or later as you transition to part-time work or retirement. It’s essential to plan carefully and thoughtfully so you make the right kind of career change for the right reasons.

Review your financial plan

It’s also important to consider how a career change could affect your finances.

If you’re contemplating a change, I strongly encourage you to schedule a meeting with me to review your financial plan as part of your career-planning process. During this review, we’ll take a hard look at your situation to assess the potential impacts on your existing financial plan and financial goals.

Depending on the circumstances, it may also be advisable for us to conduct a retirement gap analysis to assess the financial impact of the loss or gain of a company-sponsored pension or group benefits like supplemental health coverage and disability and life insurance.

If necessary, we will update your financial plan, including your financial goals, and ensure you remain on track to achieve them.

January 2023

If you’re saving for your first home, you’ll want to flag April 1, 2023, in your calendar. That’s the date the federal government recently chose to roll out its much-anticipated tax-free First Home Savings Account (FHSA).

Unveiled in the 2022 Federal Budget, the account offers a number of advantages for savers, starting with the ability to contribute up to $40,000 on a tax-free basis, with a yearly contribution limit of $8,000.

Unveiled in the 2022 Federal Budget, the account offers a number of advantages for savers, starting with the ability to contribute up to $40,000 on a tax-free basis, with a yearly contribution limit of $8,000.

There’s more good news. Based on a change made to the FHSA in late 2022, you can now contribute simultaneously to both the FHSA and the Home Buyers’ Plan (HBP). This means eligible buyers could put up to $75,000 (in lifetime contributions) into tax-advantaged savings plans toward their home purchase.

Additionally, your annual contributions to an FHSA are tax-deductible, and you won’t pay any taxes on capital gains or interest earned. In essence, the account combines the tax benefits of an RRSP and a TFSA.

The one difference between an FHSA and an RRSP is contributions made to an FHSA in the first 60 days of a calendar year cannot be attributed to the previous tax year, as they can be with an RRSP.

Eligibility rules

Canadian residents who are at least 18 years old and qualify as first-time home buyers can open an FHSA. A first-time home buyer is defined as someone who has not owned a home in which they lived at any time during the part of the calendar year before the account is opened or at any time in the preceding four calendar years.

An FHSA can be open for only 15 years or until the accountholder turns 71. Subsequently, unused savings can be transferred to an RRSP or RRIF on a tax-free basis or withdrawn on a taxable basis.

An FHSA also stops being an FHSA by the end of the year following the first qualifying withdrawal to buy a home, with any amount not used to purchase a home transferable tax-free to an RRSP or RRIF or withdrawn on a taxable basis.

Once an FHSA is used to buy a qualifying home or stops being an FHSA after 15 years or at age 71, an individual can’t open another FHSA.

Qualified investments

An FHSA would be permitted to hold the same investments as those allowed in a TFSA, which include mutual funds, publicly traded securities, government and corporate bonds and GICs.

The prohibited investment rules and non-qualified investment rules applicable to other registered plans would also apply to FHSAs.

Contributions

Annual contributions must be the lesser of an accountholder’s annual limit ($8,000) and their remaining lifetime limit ($40,000). Individuals could claim an income tax deduction for contributions made in a taxation year. Contributions made within the first 60 days of a calendar year can not be attributed to the previous tax year, as they can be with RRSPs.

Carry Forward

An individual would be allowed to carry forward unused portions of their annual contribution limit, up to $8,000 and subject to their lifetime contribution limit.

Therefore, an individual contributing $5,000 to an FHSA in 2023 would be allowed to contribute $11,000 in 2024. Carry-forward amounts would only begin accumulating after the FHSA is open.

The FHSA vs. the Home Buyers Plan (HBP)

Canadians have had access to the government-sponsored HBP since 1992. Here are the key plan elements:

The HBP allows individuals to withdraw funds from their RRSP when they’re ready to buy a home. The repayment policy is reasonable since the borrower only needs to pay back, or re-contribute, 1/15 of the borrowed amount each year.

Payments back into the plan must begin two years after the calendar year in which the withdrawal was made.

So, if you withdrew $15,000 from your RRSP as part of the HBP in 2021, you’d have to start repaying $1,000 a year starting in 2023.

Even though the repayment requirements are reasonable, there have been reports that more than 40 percent of HBP users failed to make repayments.

With the FHSA, repayments aren’t a concern because you don’t need to repay any withdrawals. If your goal is to buy a home, then the FHSA is likely the best account for parking your down payment.

The table below compares both strategies.

July 2023

Every summer at this time, it's a wise to conduct a mid-year financial checkup. The purpose is to review your financial circumstances and, if called for, update your financial plan.

Regularly conducting a mid-year review will make you more likely to remain on track to reach your year-end and long-term financial and life objectives.

Indeed, the importance of committing to regular financial reviews and investing your full attention into this essential component of the personal financial planning process cannot be overemphasized.

Prepare ahead of time

To achieve optimum results, you should be prepared to engage in meaningful, in-depth discussions that address all aspects of your finances, including your goals and priorities, current financial situation, attitudes toward risk and past experiences in the market.

A typical financial review may last two hours or more, but every meeting is time well spent and has the potential to pay dividends for years to come.

It is only when you have an up-to-date, well-thought-out financial plan suited to your needs that you can genuinely be at ease in the present and confident in the future.

July 2023

The new First Home Savings Account (FHSA) is a tax-smart way for first-time home buyers to save towards a downpayment. Account holders can contribute up to $8,000 a year, to a lifetime limit of $40,000. Contributions are tax-deductible, reducing taxable income by the contribution amount. Investments grow tax-free, and withdrawals are tax-free.

Here are some useful tips and tactics for making the most of an FHSA investment:

Use your FHSA before your RRSP

A big advantage of the FHSA over the RRSP is the fact that FHSA withdrawals are tax-free. For this reason, it makes sense to max out your FHSA contribution room before contributing to your RRSP.

Team up with a TFSA

Consider shifting funds from your Tax-Free Savings Account (TFSA) to your FHSA. This gives you a tax deduction for the FHSA contribution. Even more, you could use the resulting tax refund to help replenish your TFSA, when you have contribution room.

Gift funds sooner

If you plan to help your child or grandchild with their downpayment, your dollars will have a greater impact if you do it now rather than waiting until the home is purchased. This way, the child benefits from tax deductions, tax-free growth and tax-free withdrawals.

Factor in the timing

An FHSA can be opened at age 18, or the age of majority in your province. But it can remain open only for a maximum of 15 years (or by the end of the year the account holder turns 71). So you need to think ahead to when you imagine yourself buying a home and time the opening of your FHSA accordingly.

October 2024

Many young adults face a savings dilemma. They may understand that the sooner they begin investing, the more they will benefit from the effects of compound growth. But they can’t put money away for the future because they have more pressing financial needs now.

Do you have an adult child or grandchild in such a situation? They could be pursuing post-secondary studies or just starting in the workforce and doing their best to meet today’s cost of living.

If so, there are various ways you can help them save for the future.

Helping to save for a home

A young adult with the goal of owning a home may want to open a First Home Savings Account (FHSA). The time horizon is relatively short—an FHSA can only remain open for 15 years. This means that to benefit the most from compound growth, your child or grandchild should contribute as much as possible, as early as possible.

Ideally, they would contribute the max annual amount of $8,000 for five consecutive years to reach the $40,000 limit. For most young adults, such a rapid rate of savings would be extremely difficult, if not impossible. But with your help, they may come closer to or even reach this objective.

Topping up RRSP contributions

When starting in the working world, young adults often find a sizable portion of their earnings go to rent and paying off debts, like school and car loans. This can make it hard to save for a mortgage downpayment, let alone contribute to a Registered Retirement Savings Plan (RRSP).

With every dollar earned, they generate RRSP contribution room, but they might only be able to contribute a small amount. You can gift funds to them so they can make their maximum RRSP contribution.

If your child or grandchild has a low income, let them know about deferring the RRSP tax deduction. They can defer the deduction to a future year when they have a higher marginal tax rate and will save more tax.

When goals may be flexible

Some parents or grandparents may want to take advantage of a child’s Tax-Free Savings Account (TFSA) for family income-splitting. Although the gifted funds are after-tax dollars, all growth and income earned in the account are entirely tax-free.

With a TFSA’s flexibility, a young adult can use the account to meet virtually any financial goal, from saving for a vacation to growing a retirement nest egg.

If you have a child or grandchild interested in saving now for retirement, a TFSA can be ideal. Gifting funds when they’re younger gives them greater potential to capitalize on compound growth over the long term.

Young adults can even open two TFSAs, one for short-term and medium-term goals and the other for long-term retirement savings. This way, they can more efficiently allocate assets in their retirement savings TFSA to suit a decades-long time horizon.

Also, they’re more likely to view funds in this account as untouchable, which may not be the case if all contributions are co-mingled in one TFSA.

The Magic of Compound Growth

Let’s look at how a gift of $35,000 can exceed $285,000 by retirement.

A parent gives their child $7,000 to invest in a Tax-Free Savings Account (TFSA) upon the child turning 21. The parent continues making this annual gift for four more years, for a total of $35,000. This chart assumes an annual rate of return of 5.00%.

October 2024

A shortening time horizon typically calls for a shift toward more conservative investments to safeguard your portfolio from the risk of a market correction or crash.

Take, for example, saving for a child’s education through a Registered Education Savings Plan (RESP). When your child is still young, and you have a longer time horizon of ten years or more before withdrawals, you can afford to take on more risk. This allows your investments to potentially grow more quickly through equity investments, which, while riskier, generally offer higher returns over the long term.

However, if your child is entering secondary school, you have a shorter time horizon of only a few years. At this stage, you’ll want to begin reducing your risk exposure. When your child starts post-secondary school, preserving capital should be paramount since there will be little time to recover from a market downturn.

Similarly, consider the situation of being only a handful of years from retirement. Here, the focus should also shift towards more conservative investments to minimize the risk of losing your hard-earned money right before you need it.

Opportunity vs risk

But what if the stock market is strong when your time horizon becomes short? You may wonder about keeping your high-risk asset allocation and riding the profit wave. It’s important to recognize this temptation as the fear of missing out (FOMO).

You must measure the opportunity you hope for against the risk of the market turning. All it takes is a plummeting market at the worst possible time for you to fall short of your investment goal. 

October 2024

With holiday planning and end-of-year financial deadlines, December can be hectic. But if you start your financial to-dos soon, you’ll have an easier time later.

RESP contributions

Be sure to contribute $2,500 to your Registered Education Savings Plan (RESP) by December 31 to trigger the $500 Canada Education Savings Grant (CESG) for 2024.

TFSA withdrawals

 If you plan to withdraw Tax-Free Savings Account (TFSA) funds soon, consider making the withdrawal by December 31. This way, you can replace those funds anytime in 2025—instead of waiting until 2026 if you withdraw the funds in January or later.

Opening an FHSA

Do you have a child planning to use a First Home Savings Account (FHSA)? Remember, contribution room only starts accumulating after an account is opened. If opened by December 31, the account is eligible for $8,000 in contribution room for 2024, but the funds can be contributed anytime until the end of 2025.

RRIF withdrawals

You may want to increase your Registered Retirement Income Fund (RRIF) withdrawals to the limit of your current tax bracket by December 31. You could pay less tax now than if those funds are withdrawn later or become taxable to your estate.

Important Note: If you’re turning 71 this year, there’s an important consideration to keep in mind. You must convert your Registered Retirement Savings Plan (RRSP) to a RRIF by December 31 of the year you turn 71. This conversion is mandatory: By the end of the year that you reach age 71, RRSPs must be either converted to a RRIF or an annuity, or they must be withdrawn as a lump sum.

April 2025

According to Statistics Canada, one-person households are the most common in Canada, and this trend continues to grow. If you're single, some aspects of wealth planning gain greater importance, while others may vary significantly.

Building a Safeguard

Unlike couples, singles lack a built-in safety net from a second income. This makes disability insurance and an emergency fund essential. If you’re employed, ensure you have disability insurance. If you’re self-employed, consider an individual policy. It's crucial to have an emergency fund, ideally held in a Tax-Free Savings Account (TFSA) or a non-registered account, with enough liquid savings to cover several months of living expenses.

Saving for Retirement

Singles bear the responsibility of all expenses, including mortgages and utilities, which makes careful budgeting essential. It's crucial to stick to a long-term retirement savings plan. Couples can split pension income to reduce taxes, while singles should aim to enhance their retirement savings during their working years to prepare for future financial needs.

Planning Your Estate

While single individuals might not feel an immediate need to draft a will, identifying beneficiaries can create motivation. You might consider naming nieces, nephews, close friends or charities. In contrast to couples who typically appoint spouses or children as executors, singles might prefer to appoint siblings, friends or a trust company.

Making Decisions

Couples can easily discuss finances with one another, but singles may feel uncomfortable talking to others.

Other articles of interest

July 2025

If you have a loved one with a disability, the Registered Disability Savings Plan (RDSP) can be a valuable financial tool to help secure their future. Introduced by the Government of Canada, the RDSP is a long-term savings plan designed specifically for individuals with disabilities and their families.

RDSP benefits

One of the greatest advantages of the RDSP is the access it provides to government funding. The Canada Disability Savings Grant (CDSG) matches contributions up to $3,500 annually, with a lifetime maximum of $70,000. The matching rate depends on family income, offering higher matches for lower-income families. Additionally, the Canada Disability Savings Bond (CDSB) provides up to $1,000 per year to low-income families, even if no personal contributions are made, with a lifetime limit of $20,000.

Another key benefit is tax-deferred growth. Investment income earned within an RDSP is not taxed until funds are withdrawn, typically when the beneficiary has a lower income, which can result in a lower overall tax burden.

Contribution rules 

Anyone can contribute to an RDSP with the plan holder’s consent, and there is no annual contribution limit. However, the total contribution must not exceed $200,000 per beneficiary.

An RDSP can be opened for any person eligible for the Disability Tax Credit (DTC), regardless of age. If the beneficiary is a minor, a parent or guardian typically manages the plan. When the beneficiary turns 19, government contributions are based on their individual income rather than family income.

Withdrawals from an RDSP generally do not affect federal disability benefits, though some provincial programs may have different rules.

Starting an RDSP early helps maximize government contributions and allows the savings to grow over time, providing a stronger financial foundation for the future.

October 2025

Health issues generally increase with age, causing financial burden. Fortunately, several disability‑related tax measures are available to reduce your taxes and unlock other supports. It’s worth understanding the eligibility rules sooner rather than later.

The federal Disability Tax Credit (DTC) is the cornerstone support: a non‑refundable credit for people with severe and prolonged disabilities, it can directly lower income tax owing while also enabling access to other programs.

To qualify for the DTC you must prove to the government that your disability meets the eligibility criteria. This is accomplished through Form T2201, which is filled out by you (or your legal representative) and your medical practitioner, and then approved by the government.

Being approved for the DTC also creates eligibility to open a Registered Disability Savings Plan (RDSP) for those under the age of 60. The RDSP offers long‑term savings benefits plus government matching grants and bonds.

Other important tax relief opportunities include: the Canada Caregiver Credit (CCC) for supporting adult dependents with impairments, the Medical Expense Tax Credit and the Disability Supports Deduction.

Timing matters

If you’re approved for the DTC for prior years, the Canada Revenue Agency allows you to request changes to earlier tax returns for up to ten previous calendar years, which can result in meaningful retroactive tax relief.

Practical tips

Apply for the DTC before filing your tax return when possible (to avoid assessment delays), keep receipts and medical notes for at least six years, and remember provincial rules and credits may differ.

January 2026

As our life expectancy increases, so does the likelihood of requiring health care or assistance with daily living—and this support can be expensive.

Usually, people progress from at-home care to a private retirement home and then a private nursing home or government long-term care facility as their medical needs become more complex.

Government assistance is available but limited, so you may want to consider how you would cover the costs of potentially paying for services throughout the continuum of care.

Insurance coverage

One solution is to purchase long-term care insurance that covers care in your home or at a residence. If you’re interested in this option, it’s worthwhile looking into insurance coverage earlier rather than later, as premiums become more expensive at older ages.

Health-care savings plan

Another solution is to incorporate a dedicated health-care fund into your financial plan once major debts—like your mortgage and children’s education—have been paid off.

Consider using a tax-free saving account (TFSA) or a non-registered account. You could contribute a set amount each pay period as well as annual bonuses and financial gifts.

If you don’t require long-term care, these dedicated savings could become estate assets for your heirs.

January 2026

Whether you get married or become single, any change in your marital status usually affects your financial life—including your investments. Here are just a few examples of investment decisions you may face.

Getting married

A new spousal partner may require working out conflicting investment risk tolerances. We can help either by enabling each of you to maintain your current risk level or by finding a suitable compromise.

If you're in different tax brackets, the higher-income spouse may want to open a Spousal Registered Retirement Savings Plan (SRSP) with the aim of reducing tax in retirement.

Dealing with divorce

A common outcome of divorce is a shortfall in retirement savings. We can help you rethink your retirement goals and invest in a way that balances capital preservation and growth potential.

Remarriage and beneficiaries

With remarriage comes new financial goals that may call for changes to your investment strategy, such as new retirement goals and a different projected retirement date. Also, an estate-plan update may be necessary to provide for your new spouse and children from your previous marriage.

Remarriage and beneficiaries

A widowed spouse may receive rolled-over assets from their deceased spouse’s RRSP or Registered Retirement Income Fund (RRIF) to their own. Careful management is required because this rollover can affect investments, monthly income, taxes and estate planning.

July 2026

Saving for your own retirement and your child's education at the same time can feel like a tug-of-war for limited dollars. Here’s a useful guiding principle: your child can borrow for school, but no one will lend you money for retirement.

Prioritizing your retirement first protects both of you—and spares your children from having to support you later. Still, the right balance shifts as your family grows.

The early years

When your children are young, time is on your side. If possible, aim to contribute enough to the RESP to capture the full Canada Education Savings Grant (CESG): 20% on the first $2,500 contributed each year. That’s up to $500 annually — a hard-to-beat return on investment. At the same time, try to build the habit of regular RRSP contributions, even modest ones, so your own retirement savings do not fall too far behind

The peak earning years

As your income grows, so does your ability to fund both goals. Continue contributing to the RESP to secure the annual grant, then direct additional savings to your RRSP, where contributions can reduce taxable income. If your RRSP contribution generates a tax refund, consider using some or all of it to top up the RESP.

The later years

If your RESP savings fell behind, you may have unused CESG grant room that you can still take advantage of, if your finances allow it. Once tuition is funded, shift your focus firmly back to retirement.

Throughout, remember the RESP and RRSP aren't your only tools—a TFSA offers flexibility for either goal, and an FHSA can help with a first home.