Parents and grandparents are used to putting aside money for their children and grandchildren in an effort to provide them with a comfortable life and better opportunities. With the cost of living increasing for each generation, giving younger family members an extra boost financially provides peace of mind for everyone. What happens when the younger generations become self-sufficient and no longer need a boost from their elders? This situation provides parents and retirees with extra cash, which they may be unsure how to use.
The first thought that comes to mind when faced with more money is to spend. However, careful financial planning needs to be considered so as to not drain these extra funds too early. Ensuring clients have enough money saved for retirement is the most important factor when dealing with newfound cash. One option is to use the additional income to potentially help clients retire earlier than expected. If they do not have big projects on the horizon such as home renovations to consider, this alternative may be quite appealing. There are also tax-efficient strategies that can be implemented, such as TFSAs. If your client is considering putting the cash into an RRSP, it is important to remember that the influx of funds could potentially push them into a higher tax bracket.
For more information on retirement planning, follow the link below
https://www.theglobeandmail.com/investing/globe-advisor/advisor-funds/article-how-to-help-empty-nesters-best-use-their-newfound-cash/
