14 - Wednesday, December 27, 1989 ~ North Shore News BUSINESS TIPS TO BUILD A PENSION Everybody needs a retirement plan “EVERYBODY NEEDS a retirement plan even if they don’t plan to retire.” That quote comes from Robert Atchley, a specialist in aging, in a cover feature in Fortune magazine entitled: ‘“‘Will You Be Able to Retire?”’ Many people plan to work at least part-time in retirement, or perhaps don’t plan to retire at all. But what happens if your health fails? Or if you change your mind — and don’t have enough money to retire? Depending on how gocd a pen- sion plan you have, you should probably be saving/investing 10 to 20 per cent of your (family’s) pre- tax income to maintain your standard of living after you retire. If you hope to retire early, the re~ quired savings rate could well be closer to 30 per cent. Yet in the lead article of the cur- rent issue of Taxation Today, edi- tor Evelyn Jacks notes that more than half of all Canadian workers have no RRSP or work-related pension plan. “And accumulating wealth to support. an individual or family’s future living standard has become increasingly difficult,’ she said, “especially for those in the peak earning and saving years of 35 to 54. ‘‘We have had slower economic growth, higher mortgage rates and significantly higher taxes. In 1969, Canadians spent 39 per cent of their incomes to pay the various taxes. Today, taxes make up more than 50 per cent of a household’s expenses — more than the total spent on food, shelter and clothing.”’ What can you do to make sure you have enough money so you can at least choose whether you want to retire? Jacks suggests: * Contribute to a registered pen- sion plan or RRSP as early as you can. *Shelter income from taxes wherever possible. * Minimize debt charges. NEW YEAR’S SPECIALTIES READY TO EAT HAMS SHANK OR WEDGE CUT READY TO EAT BONELESS HAMS * Acquire assets, especially a home, if you can. * Look after your health so you can be productive longer if neces- sary. Jacks said as the percentage of seniors doubles over the next 30 years, individuals, employers and government will all have tc work hard — and work together — to help maintain 2 reasonable stand- ard of living for retirees. collars and sense Mike Grenby In her newsletter, Jacks provides a one-page summary of the changes being introduced by pen- sion and RRSP reform. And she also gives a brief description of 40 changes on the 1989 tax return — a far more detailed breakdown than Revenue Canada has in its 1989 Tax Guide. 378 BLACK FOREST, HONEY OR ROYAL « Grade A Turkeys, Ducks, Geese * Pheasants, Rabbits, Cornish Hens, etc. x Prime Ribs and Barons, made to order *« Filet Mignon, any which way you like it * Fresh, local Leg of Lamb, Racks, Crown Roasts, etc. x Homemade Cocktail Sausage and much more YOU NAME IT, WE GOT IT! BOB THE BUTCHER LTD, 281-1109 Jack's list provides an excellent reference to help make sure you don't miss out on any deductions or credits — or forget to declare income and perhaps end up paying 35 per cent interest on what you owe. You can get a free copy of the eight-page newsletter by writing to Taxation Today, 1345 Pembina Highway, Suite 205, Winnipeg, Manitoba E.3T 2B6. (Sorry, there’s no toll-free number with this offer. We had too many readers running into busy signals on overloaded phone lines when they responded to the offer of a different tax newsletter a couple of months ago.) Taxation Today is published 10 times a year. A regular subscrip- tion is $89 but Jacks is offering the student rate of $69 to those who write for a free copy of the current issue. Jacks warns if you pay quarterly tax instalments, you will have to make payment by the 15th of next March, June, September and December. Until now, you had un- til the end of those months. If you should have been paying quarterly but haven’t, you will be hit with an interest charge which jumped to 15 per cent for the last three months of 1989. You are supposed to pay quarterly if you find you owe fed- Small Navel Oranges Celery Small Grapefruit Lemons Head Lettuce eral tax of $1,000 or more in the current tax year and the im- mediately preceding tax year — and if tax is not withheld from at least three-quarters of your net in- come. Jacks suggests you ask your local tax office for Form T7B In- stalment Guide for Individuals if you think vou might have to pay quarterly, especially if you receive alimony, maintenance or separa- tion payments; if you are self- employed with net business in- come; if you are an investor with large interest or dividend earnings; or if you are a farmer or fish- ermani. Since Ottawa boosted the inter- est on unpaid taxes by two per cent, nct paying quarterly when you should has become rather ex- pensive. It doesn’t make sense to save money that might earn seven per cent after tax (if you are lucky) when you are being charged at least double that on taxes you owe. eae Mike Grenby is a Vancouver- based columnist and independent financial adviser; he will answer your questions as space allows in _ his column — write to him c/o North Shore New, 1139 Lonsdale, North Vancouver V7M 2H4. 39¢ Ib. 49¢ lb. 3 for 19° 4 for 70° 594. Lonsdale Farm Market 988-1669