36 - Sunday, December 16, 1990 ~ North Shore News

BUSINESS

Never too young to think
about saving for retirement

RETIREMENT PLAN-
NING is a serious concern
of older people, but
younger people also wonder
if they should put money
away for retirement years
that are so far ahead.

With the constant erosion of in-
flation, the impact of taxation and
all the uncertainties that surround
us today, the average younger
person tends to ask ‘‘why
bother?’’

Why bother indeed. Let’s look
at some facts:
© Nearly 60 per cent of Canadians
over 65 must rely on the means-
tested guaranteed income supple-
ment.

* Private pensions cover only 45
per cent of the full-time
workforce.

*Two out of three widows in
Canada live below the poverty
level.

So, the question is: when the
time comes for you to retire, will
you be able to afford it? Here are
some simple, basic strategies to
enable you to answer that ques-
tion positively.

Since 1957 the Canadian gov-
ernment has offered substantial
tax incentives through Registered
Retirement Savings Plans (RRSPs)
to encourage taxpayers to make
Provision for their own retire-
ment. Here is a comparison be-
tween a simple savings program
without the benefit of tax defer-
ment and an RRSP program.
© Example: $7,500 invested an-
nually in a tax-sheltered RRSP
earning 10 per cent per annum for
25 years would produce a retire-
ment fund of over $737,000.

* Assuming a 40 per cent tax
bracket, $7,500 cf income, after
taxes, would produce only $4,500
for investment. After deduction of
taxes, this would produce six per
cent per annum of net savings

Bert
Wickham

RETIREMENT PLANNING

which, over 25 years, would pro-
duce a retirement fund of
$247,000. A difference of almost
300 per cent.

Many young people feel that
there is plenty of time to start a
retirement savings plan. The fol-
lowing figures show what we call
the “penalty for waiting’:
© One hundred dollars a month
earning 10 per cent over 25 years
produces a fund of

$132,700
© The same amount invested over
20 years produces
76,000
© This is the penalty for waiting
five years — a difference of
$ 56,700

All for a mere $6,000 of addi-
tional savings. This is not a math-
ematical trick, it simply shows the
enormous power of compound in-
terest over the long term. So, start
as soon as you can.

Although there are many, often
exotic solutions offered to the
problem of meeting inflation, we
still find that a good answer is to
have a comfortable margin of ex-
cess income at retirement that can

Hn

Stew your

Shaya rn cova sn "ea

“jp 10'4 litres of Autopar 4 Season ar.

titeeazefcoolant + Check raciator, cap. i ther:

4600 MARINE sade ss VAN.

Parts and Service: Closed Dec. 24, Open Dec. 26

OUR SERVICE IS AS G000 AS GOLD

CUSTOMER
CARE .., ;

980-3431

Hours — Mon.-Fri. Bam-5:30pm

be reinvested to meet future infla-
tion.

During your working lifetime
learn to live on less than your
total income and set aside a fixed
portion of your RRSP. After
retirement, the same principle ap-
Plies: continue to set aside a por-
tien of your income, whatever it
may be, and you will always have
a fund for ‘‘indexing’’ your per-
sonal pension against inflation.

Bert Wickham is one of B.C.'s
foremost authorities on financial
planning for retirement. This
series of articles is designed to
help you make the most of vour
income in retirement and keep
your taxes to the legal minimum.
However, as they are of a general
nature, readers are advised to
check carefully before applying
them to their personal situations.

CONOQ %

AT THE BAY.
CAFETERIA IN
PARK ROYAL

FAMILY
SPECIALS

Thursday 4:36-7:30pm
ROAST BEEF
DINNER
$ 4’
Friday........... 4:30-7:30

2 for 1

FISH & CHIPS
$449

Delicious Roast Turkey

Dinner S99
{with ail the Tummings; only 5

Old-fashioned
Mincemeat Pie only? t 65

Drop in during your
next visit to

AVAILABLE UNTIL
DEC. 29, 1990

only

CAPILANO BUFFET — PARK ROYAL

PLEASE, iP US...

© $20 helps us buy a weekly bag of groceries for one family
© $60 helps sustain a family for one month
© $720 assists that same family for a year

Please help those in need. All donations are tax deductibla,

CUP AND MAIL WITH YOUR.GIETIODAY og
YES! | want to provide food far the hungry. 4 :

0$20 $60 0 $720 OOther $ —_—_—_—_——_}

Province
Code ——— ;

\ 6 @ THE FOOD BANK
, = 1650 Quebec Street, ea9- aoaed .

' a Postal

Vancouver, BC. V6A 3L6

‘ “ECONO TRANSMISSION.
-BRAKE S MUFFLER |

TRANSMISSION §

 —Custom and

m =©dual exhaust

a —Automatic and §

¥ 8 standard m

& transmissions @

a —Clutches and

Bw all drive-line

fm §©6components

m —25 Ton

7 motorhome .

® and truck hoistZ

a —Ail work
guaranteed

*
we

»

© Replace rake Shoes.

© Resurttace Drums ‘

© Replace Disc Pads 59
f° top Up Brake Fut

* Machine Rotors $

© Repack Bearings
Re fufjust Br..es

* Road Tes!

984-9581 Open Mon-Sat. 8:30-5:30 p.m.
860 W. 15th Street, North Van a.

{Across from Dave Buck Ford)
Also see our 2nd Socation at: :
2639 Kingsway, Vancouver 436-1633 :