EVEN WHEN interest rates are rel- atively low, the registered retire- ment savings plan-should still form the basis for most Canadians’ retire- ment financial planning.

“The two major advantages are the immediaic tux break you get when you contribute to an RRSP and — more important — the ongo-

ing tax-sheltered growth of the:

money in the plan,” said a CGA who helps both business owners and professionals develop retire- ment income plans.

“What really. counts is the real growth, after inflation. And you will probably find if you held GICs and term deposits in your RRSP (or RRIF ~— registered retirement income fund), your real, after-infla-

‘tion return has probably changed very little — because inflation has - dropped along with the yield.”

As long as you can continue to earn perhaps 3% or 4% above your personal inflation rate (which is the increase between your present and future expenses), you should be fine: :

(Note that your ‘personal infla-

_ tion raie could differ from the geri-

eral cost-of-living index. Look at

.. what you spend your money on, and ‘how the price of those goods and services change from yeur to year.

* That's should concern you.)

The CGA provided some tips to help you get the most from your RRSP:

the only. inflation rate that |

@ Invest early,

Whuatever the interest rate, mak- ing only seven equal contributions between ages 18 und 25 will gener- ate the same amount by age 65.

“That truly does Hlustrate the magic of compound interest — leaving the interest you earn to cam further interest,” the CGA said.

%@ Invest regularly.

Putting $3,000 a year into your

RRSP earning 6% for 40 years will produce almost half a million dol- lars.

“And if you can increase your annual return to, say, [0% a year, you'll have almost $1.5 million,” said the CGA,

& Split and save. If your spouse will be in a lower

‘tax bracket than you when RRSP

funds are withdrawn, contribute to a spousal RRSP.

“You still get the tax break but, subject to the ‘three-year rule,’ the moncy will be taxed af your spouse’s lower rate when with-

drawn,” the CGA said.

& Contribute early.

“Most people contribute in January or February for the preced- ing tax year,” said the CGA.

“But if you contribute monthly

‘during the tax year or, better still,

make your contribution at the beginning of the current tax year, you will have up to 10% more money in your RRSP by the time you start to take money back out.” Right now you can calculate

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yackbone of plan

appropriate for you and your retirement needs.

your 1994 RRSP contribution maxi- mum: it’s 18% of your carned

income in 1993, to a maximum of

$13.500, minus any pension adjust- ment (PA) if you belonged to a pen- sion or deferred profit-sharing plan.

Once. you get the Notice of

Assessment from Revenue Canada after you file your [993 return, the form should include your 1994 RRSP = Contribution Limit Statement,

It also shows any “room” left over if you didn’t make your full contribution for the 1991 through 1993 tax years.

For retirees, that means even if

you retired at the end of 1993 and have received only pension income since, you may still make a regular RRSP contribution for 1994 based on your 1993 earned income.

One big advantage of making your 1994 contribution: now or at

NEWS photo

“THERE ARE a lot of RRSPs available In the financial marketplace. Shop around to find the one that is:

least signing up for an automatic monthly RRSP program is that it could lead to a larger paycheque. Provided your deduction will create or increase a.tax refund, you may then apply.to Revenue Canada to give your employer permission to withhold less tax from cach pay- cheque throughout 1994, (Ask your local tax office for Form L-18.. Request for Reduction of :Tax: Deductions at Source.) o

| onsulting with a CGA in financial “matters is always: a wise move.

‘ CGA's unique training makes them irreplaceable in analyzing complex financial situations and providing practical solutions. They are the professionals that business peopie count on. And you'll find them wher- ever sound financial decisions are made.

CGas have earned this position of respon- sibility and trust, They are members ofan organization that leads the way in demanding the highest leveis of professionalism. And CGA Continues to protect this reputation by requiring all its members to update their skills ~-the only acceunting association to do so.

When you need the expert services ofa thoroughly qualified financial manager, an experienced public practitioner, or are con- sidering a career in professional accounting, the smart move is to look to CGA.

It could be the biggest deal of your life.

_ CGA

The Certified General Accountants : Association of British Columbia 1595 West 8th Ave. Vancouver, B.C. V6) ITS (O04) 732-1211