Let out a sigh of relief, you made your RRSP contribution by the deadline last month. Now what? Or maybe you were one of the ones that was ‘going to, but forgot, or didn’t have the money, or just missed out. Did you just realize that you could have contributed more, or borrowed the money, or contributed to your spouse’s plan? Many people jump in at the last minute without having the time to pull together and coordinate a plan. Now is the time to review and record your present RRSP contributions.
If you’re very close to retirement, you may be more concerned about preserving your money rather than making more. You need to position yourself so that you aren’t playing catch up when it is time to start withdrawing from your retirement plan. Your portfolio has to be diversified so that you won’t have to take un-necessary risks at the time in your life that you can least afford to or can handle.
If you have many years to go before retirement, then you need to continue to invest. At least annually you have to evaluate what you have, do you still like it, does it still achieve your objectives and is it within your risk tolerance?
The earlier in the year that you make your RRSP contribution can make a large difference in the amount of growth your RRSP portfolio will have over the years. If you missed the deadline, make a contribution now; if you made the deadline consider contributing now for 2006 and not waiting until next February. You’ll not only miss the rush but your money will have an extra year of growth. Millions of dollars have poured into ‘parked’ RRSP investment vehicles such as money market funds and short term GICs.
If you haven’t received a call by now to meet to discuss where these funds can be allocated to best meet your goals, then pick up the phone and make the call. Ensure your funds are working as hard as you do, you will still get the tax break advantage that the government allows, but you won’t be taking maximum advantage of the magic of tax free compounding and the growth this can mean to a portfolio. If you are unable to contribute to RRSPs and have already converted your portfolio to a RRIF, the same core rules about evaluating, recording and having an up to date plan apply.
Take control, know your options, ask questions and utilize retirement income projections; based upon anticipated rates of return and inflation your projected income can be estimated for future years. April showers bring May flowers, and as the weather gets nicer many start thinking about getting out in the garden and in a couple of months will be able to see the results of their efforts.
It is taking this time and preparation that will ensure that you will be able to reap the benefits of your hard earned money for many years to come.