Health Taxes and Retirement Savings, Parasitic Relationship?

CIBC’s latest retirement poll showed that the residents of the country are not having things as easy as others might think.

48% of respondents 50 years of age and older either retired due to health issues or were simply fired. Because of this facts, a lot of them are losing their savings to medical bills.

24% of respondents are spending more on their health than they expected even though they are living in a country that prides itself on universal health care.

9% touted the maintenance of their homes and renovations costs as a reason; 11% said debt—which includes mortgage debt—costs more than they had expected even though the borrowing rates are at their lowest ever; 15% say taxes are higher than they’d expected them to be; a lot of them failed to take the tax repercussion of removing money from a registered retirement savings plan into consideration.

This has made the majority of them regret not start saving earlier. The CIBC has advice for the rest of us to better ready ourselves for future retirement. The advice includes strategy that maximizes RRSPs and TFSA—tax free savings accounts.

A strategy that entails taking money from an RRSP in a low tax bracket and placing them in a TFSA that is not taxed upon the withdrawal of funds!

Another is rectifying the CPP—Canada Pension Plan payments to maintain low taxes and tax advantage of the OAS—Old Age Security payments.