There are three certainties in life;

1. Death

2. Taxes

3. and the "GMWB"

The "GMWB" or Guaranteed Minimum Withdrawal Benefit is a retirement tool (the only of its kind in Canada ) that will help you ensure you don't run out of funds during your retirement by providing…

• A return of principal guarantee through regular withdrawals
  
  
• Automatic resets to lock-in market gains and potentially increase guarantees
  
  
• A guarantee bonus in each of the first 10 years if no withdrawals are taken in that year

The GMWB is a key component in ensuring a sustainable withdrawal amount is available to you during the retirement phase of your life.

TIP#1: BUDGET 2007 TIDBITS

Prior to the March 19 th 2007 Budget RRSP holders had to have RRIFed or Annuitized their RRSP assets by the end of the year in which they turned 69.

The new rules (subject to the Budget being passed in the House of Commons) allow you to keep your RRSP to age 71.

For those who recently RRIFed their assets i.e. recently turned age 69: they now can exercise at age 70 and 71 a zero RRIF Minimum or in other words stop their RRIF payments up to Dec 31 st of the year they turn 71 with no tax requirements thus allowing them to further tax shelter the growth of these assets.

TIP#2: INFLATION

Imagine if you will that it is the year 2000 and you need to go to the local grocery store to buy a loaf of bread, and you have a Loonie in your pocket to do that.

As it turns out you end up not going to the grocery story, however the Loonie you had ear marked for that loaf of bread remains in your jacket pocket only to be found 7 years later when again you need to buy a load of bread.

The question and the answer are indeed simple.

Q.	What does a loaf of bread cost in 2007?
A.	You will probably need close to 2 Loonies or a Toonie to buy that same loaf of bread.

There is a moral to this story and it is inflation driven.

We believe in saving for a rainy day and for our long term needs i.e. 10-15-20 years into the future. However we need to take a prudent approach to saving that in turn allows us at the very least to keep pace with inflation.

Today's current interest rate environment in combination with inflation (relatively benign today) can put severe limitations on our ability to save unless we have some equity investments in the mix.

Perhaps you have heard of the rule of 72?

It is a mathematical anomaly that allows you to calculate the growth of an investment over time.

i.e. $1,000 compounded at 10% will double in 7.2 years to $2,000

i.e. 72 ÷1 0% = 7.2 the number of years it takes to double the $1,000

If we were to assume a rate of return of 3.5% compounded with inflation at 2.5% for a net return of 1% and again apply the rule of 72 ÷1%=72 years to double your money; would that appeal to you? Probably not!

TIP#3: RRSP

There have been a number of articles written recently in various financial publications about whether or not Canadians have sufficient assets in their RRSP's to meet their retirement needs.

It seems that when January/February rolls around (the 60 day window that CRA allows for deposits to RRSP's for the previous tax year) that many Canadians either have no dollars or fewer dollars than they would like to be able to contribute to their RRSP's hence many of these accounts are woefully in adequate.

Here is a suggestion that you might want to give serious consideration to:

Why not make monthly bite size deposits rather than be faced with an unwieldy lump sum deposit or an RRSP loan with interest to be paid on the loan balance?

Taking this approach results in a number of benefits:

• You can have your tax at source reduced thus making your monthly deposits easier.
  
  
• You get the benefits of dollar cost averaging which in time allows you to buy units of a fund at a lower cost when the market dips.
  
  
• Your money (RRSP) goes to work a year in advance versus a year behind.

The Bottom Line :