Wednesday, January 9, 1991 — North Shore News - 35 BUSINESS Should you be paying into RRSPs? FIND YOUR number below to find whether you should be getting excited about RRSPs. Also check the other age categories in case you are more mature — or younger — than your age. Remember: (a) You deduct from your income money you contribute to your (or a spousal) registered retirement saving plan. (b) Funds in an RRSP can grow tax free. (c) Money received back from an RRSP must be added to income. Also remember to balance (a) savings now to have more to spend later with (b) spending and enjoying now. ©17-20: Get into a_ regular RRSP savings habit early and that habit should pay big dividends in the future. Perhaps set up an automatic monthly contribution program, no matter how smail. Put $1,000 a year between ages 18 and 25 into an RRSP com- pounding at 10 per cent and you will have $442,593 at age 65. If you start only when you are 25, you will have to contribute $1,000 a year for the next 40 years to ac- cumulate the same $442,593. If a student contributes to an RRSP and se ends up with little or no taxable income, then un- needed education and tuition cred- its may be transferred (within limits) to a supporting parent or grandparent. #21-30: You might use an RRSP for a short-term objective. Contribute while you are working to save tax. Then perhaps withdraw some of the money in a year when you return to school, travel or otherwise have little or no income. You will pay back lit- tle or no tax. Contribute to a spousal RRSP if your spouse plans to take time off to raise a family. Once three years have passed since you made any contribution to any spousal RRSP, your spouse may withdraw the funds and probably pay little or no tax. This money could be used toward buying a home or paying down a mortgage. You can also use your own RRSP for this pur- pose as long as taking out and declaring the money won’t find you in a higher tax bracket than you were in when you made and deducted your contribution. * 31-49: Most people should be contributing to an RRSP by this stage, especially if they have more than $28,000 taxable income a year (which means they pay at least 41 cents tax on every dollar of income). Only people with ex- pertise and time can outperform RRSPs by investing in the stock market, reai estate or a business. Again, if you expect your spouse to be in a lower tax Put Our Experience to Work For You Today ® Retirement Income Planning @ Estate Planning @ Charitable Gift Planning Call today for our - — Consumer's Guide to Paul Milley , — North Shore Resident RRIF’s and Annuities. “Advice is only as good as the person you ask...” ZLOTNIK, LAMB & COMPANY Life Insurance / Retirement Incomes / Employee Benefits 1200 Park Place, 666 Burrard Street Vancouver, B.C. V6C 2X8 (604)688-7208 Toll Free Line 1-800-663-3171 Michael Grenby DOLLARS AND SENSE bracket than you when the RRSP funds are withdrawn, contribute to a spousal RRSP. . Mortgage paydown vs. RRSP? If you have taxable income of more than $28,000 and will earn a reasonable return on the RRSP for at least 15 years, contributing to an RRSP is provably more profitable than paying down the mortgage. However, starting with this 1991 tax year, you could pay off the mortgage first, then make catchup RRSP contributions later — as Ieng as you do make those extra contributions. Or compromise: contribute to an RRSP each year, then use your tax savings to pay down the mor- tgage. © $1-60: With few exceptions, working people in this age bracket should be making maximum RRSP contributions, especially as most are likely to be in a higher tax bracket now than after retire- ment. Continue to put money into a spousal plan (if the comment above applies). Under the new rules, you may over-contribute up to $8,000 to an RRSP. You could then apply your “contribution room’’ in a future year to use up the over-contribu- tion. If you don’t, you will be taxed again when you withdraw the over-contribution. If you are in the top tax bracket, it could take around 15 years before the tax-free growth more than makes up for this double taxation. © 61-70: Continue contributing as long as you/your spouse will not be in a higher tax bracket when the RRSP funds are withdrawn. If you are receiving a private pension, you may put up to $6,000 a year of this pension (but not CPP or OAS) into a spousal plan through 1994. Leave your RRSP to grow tax free as long as (a) the funds are not needed and (b) you won't be Keith Sanders, head of our Retirement Planning group. in a sharply higher tax bracket when the money comes out, ¢71-plus: If your spouse is 71 or younger, you may still con- tribute to a spousal RRSP. You must decide before the end of the year you turn 71 how you want to withdraw your own RRSP Question is, are you one of these people? ” Find out by attending one of our seminars. North Vancouver: Tuesday, January 22 7pm - 9pm, Mt. Seymour Golf & Country Burnaby: Thursday, January 24 7pm - 9pm, Sheraton Villa Inn North Vancouver: Tuesday, January 29 7pm - 9pm, Lonsdale Quay Hotel Vancouver: Thursday, January 31 7pm - 9pm, Coast Plaza (Stanley Park) Whistler: Tuesday, February 5 7pm - 9pm, Whistler Conference Centre a Members FREE! Non-members $5. Register early, 986-6728. Seating is limited funds — whether as cash (usually not a good idea because you lose too much to Revenue Canada) or through an annuity or RRIF (reg- istered retirement income fund). Mike Grenby is a Vancouver- based columnist and independent personal financial adviser. “Contrary to popular opinion, not everybody needs an RRSP, right now, right today. Club a a