Introduction to Lifestyle Planning
As a starting point, it’s essential to look at the big picture to understand where you’re going. This includes modeling all current and future financial resources, including your cash flow and activities in your holding company. This provides a clear picture of what you have today and gives you a general feeling for your wealth growth or decline over time, future annual and final taxes, and estate values. With this background, you can experiment to determine which options are available to you and which you want to provide for your lifestyle, regarding expenses, lifestyle, and leaving a legacy.
Understanding Tax Credits and Deductions
From the tax side, it’s about understanding which tax credits and deductions are available to you and how you can use them to match your personal values, beliefs, and lifestyle. You also need to understand how your individual investments are taxed in your non-registered and registered accounts and in your holding company. Additionally, you need to be aware of the three different dividend options that you have when drawing from your Holdco and the effects of these investment tax and dividends on tax credits and services.
Less Well-Known Tax-Saving Strategies for Pensioners
Some less well-known tax-saving strategies for pensioners include setting up a donor-advised fund (DAF). You can add as much money to the fund as you like, and once it’s there, you can manage the money as you see fit, and the investment will grow tax-free. You can claim the charitable tax credit immediately or defer it for up to five years. It’s also up to you to decide when to give the charity organizations of your choice the DAF money. Another strategy is using flow shares with an immediate liquidity provider. You buy the shares and then immediately sell them to a waiting buyer for less than what you paid. The tax credit does the work, and you can save taxes on the distribution.
Insurance and Investment Strategies for Pensioners
A second constant life insurance in your holding company is another tax-saving strategy. Money invested in the policy is virtually tax-free, and if it pays off, a capital dividend account (CDA) is equal to or almost the full value of the death benefit. You can then pay a tax-free dividend that corresponds to the CDA from Holdco. While you have the guideline, there may be other ways to use the guideline, such as borrowing for tax-free income or investments. Considering a long-term, buy-and-hold portfolio of simple, inexpensive index ETFs for your non-registered and corporate accounts can also help reduce taxes.
Conclusion
In conclusion, there are many strategies that pensioners can use to reduce their taxes and maintain their lifestyle. From setting up a donor-advised fund to using flow shares and insurance, there are many options available. It’s essential to understand how your individual investments are taxed and to consider a long-term, buy-and-hold portfolio to minimize taxes. By taking the time to understand these strategies and seeking professional advice, you can make informed decisions about your financial future and ensure that you can maintain your lifestyle without worrying about running out of money.