Individual Retirement Accounts In Canada

What are Individual Retirement Accounts?

Canada has many types of retirement accounts that are available. The most commonly discussed around the water cooler are the TFSA and RRSP. However, there are many more to note. You may even have one of these or end up with one in the future.

There are LIRA accounts which is a Locked-In Retirement Annuity. These get created when you leave a company or union and have a pension. The employer allows you to commute that pensionable value (based on years of service and contributions) into an account that you can control. It follows similar rules to an RRSP, except you cannot withdraw from it or begin taking income until a certain age. Canadians are often unaware of what they can invest these accounts in, but your choices are pretty vast.

Another Canadian personal finance account type is the RDSP. The Registered Disability Savings Plan is not specifically for retirement but rather an account to help disabled individuals. These folks also need help in retirement. Therefore these plans effectively form part of retirement for many of those disabled beneficiaries. This assumes, of course, it has been funded well, and money is still available.

A pension with an employer (defined benefit or defined contribution plans) are other retirement plans but are accounts you have no control over. Although very helpful for income stability in retirement, we wouldn’t call this a retirement account as you have no access to the plan or control over the outcome.

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individual retirement accounts in canada

 

 Retirement plans in Canada

Here is a list of retirement plans in Canada

  • Old Age Security Pension (OAS)
  • Registered Retirement Savings Plan (RRSP)
  • Tax-Free Savings Account (TFSA)
  • Guaranteed Income Supplement (GIS)
  • Employer Pension Plans.
  • Life Insurance Plans
  • Canadian Pension Plan (CPP)
  • Real Estate

You can get accounts at a huge variety of institutions. Your local bank or credit union. The big five banks, insurance companies, and of course, brokers and brokerage houses. You can either transfer between accounts of the same type or open a new account at a new institution. There is no limit to how many RRSP or TFSA accounts you can have; there is only a limit to how much contribution room you have from year to year aggregate in that government-sponsored tax-qualified plan.

Canadian Individual Retirement Accounts

Of course, you can have investments and savings that exist outside of these official account types. Most would consider their stock or open mutual fund portfolio or cryptocurrency accounts and even income properties themselves as retirement account. They are investments, yes indeed, but not explicitly classified as retirement accounts. 

 

The least known vehicle for retirement income that creates flexibility and options is high cash value par dividend-paying whole life insurance. Using an account like this, you have steady, stable savings and the best liquidity on the planet. You can access capital before retirement and even create tax-free income in retirement. Many would argue it’s the best retirement account in the country, yet still so few know how to set them up or use them over a lifespan. Check out the articles, great explainer videos and podcasts we have available on the site to get a complete understanding of how this is quickly becoming the most sought-after retirement mechanism in Canada.

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Individual Retirement Account Experts In Canada

At Ascendant Financial we have expert financial advisors and coaches that can help you understand all your options with Life Insurance in Canada. Register for our training so that you can book a time with your own advisor

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