June 12th, 2024

Financial Focus: 2023 financial planning strategies for seniors

By Craig Elder on February 18, 2023.

Preserving and growing your wealth may involve implementing tax, investment and estate planning strategies that suit your circumstances and goals. While some strategies are available at any age, others are only available in the year you turn age 65 and beyond. This article discusses financial planning considerations for seniors and offers an overview of commonly used strategies.

Pension income splitting

If your spouse has a lower marginal tax rate, consider splitting eligible pension income with them to reduce your family’s overall tax bill. Eligible pension income includes, but is not limited to, life annuity payments from a pension plan and, when you’re age 65 or over, it also includes withdrawals from your RRIF, LIF, RLIF, LRIF and prescribed RRIF accounts.

If your income at retirement is expected to be higher than that of your spouse, consider making a spousal RRSP contribution.

If you and your spouse are both age 60 or over and are receiving or are eligible to receive Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits, consider sharing your CPP or QPP benefits.

If you’re turning age 71 this year and are still earning RRSP contribution room or have unused room carried forward, before you convert your RRSP to a RRIF or another RRSP maturity option, consider making a final RRSP contribution (based on your earned income for 2023) by December 31, 2023.

Consider contributing to your TFSA. The annual TFSA contribution limit for 2023 is $6,500.

If you have a younger spouse and do not need the mandatory annual minimum RRIF payments based on your age, you can elect to use your spouse’s age when setting up the RRIF.

If you’re age 65 or over, you may be able to claim the age amount on your tax return. The age amount is a federal non-refundable tax credit of $1,259.40 (15% of $8,396 for 2023).

You may be entitled to receive a federal non-refundable pension income tax credit on the first $2,000 of eligible pension income you receive in the year.

These strategies may or not apply to you. Consult a financial planner or your tax professional prior to acting on any strategies outlined within.

A. Craig Elder, CFP, FMA, CIM, FCSI, is a Senior Portfolio Manager and Wealth Advisor with Elder & Punko Wealth Advisors of RBC Dominion Securities Inc. in Medicine Hat. Source material provided by RBC Wealth Management. RBC Dominion Securities is a member of the Canadian Investor Protection Fund. For more information on this and other financial strategies, contact Craig at craig.elder@rbc.com or 403-504-2723. http://www.elderpunkowealth.ca

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