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Think beyond company pensions for your retirement income

Is your retirement security at risk? If you plan to rely on your pension alone, the answer may be unclear. Many employees who belong to defined-benefit pension plans are concerned about the retirement income they’ve been promised. They are worried that pension deficits might prevent their company from meeting their future obligations.

Planning is essential

The best way to secure your retirement is to take responsibility for your future now and create a sound financial plan based on your goals. Your pension is just one way to fund your retirement.

If you haven’t already done so, consider starting a Retirement Savings Plan (RSP) — and defer paying taxes while setting aside money for your retirement years. An RSP allows you to contribute a certain percentage of your income each year, up to a maximum defined by the federal government. Your contribution limit will be reduced by the amount contributed to your employment-based pension plan, but everything you do contribute will grow on a tax-deferred basis in your RSP. In addition, you can control what your RSP invests in, unlike your registered pension plan, where the plan’s trustees call the shots.

If you have extra cash after maximizing RSP contributions, you may want to consider creating an additional savings cushion. A Tax-Free Savings Account (TFSA), might be a good place to start. This account allows you to save up to $5,500 per year, and you can withdraw as much as you like, whenever you like, tax-free. Your savings grow within the plan with no tax consequences.¹

Try the Your Retirement Strategy tool to find out how much you might need to save to meet your retirement goals. With sound financial advice you can make the most of your retirement plan.

¹ The TFSA contribution limit for 2013 is $5,500. This limit is indexed to inflation. The annual TFSA contribution limit was $5,000 from 2009 to 2012. The annual TFSA contribution limit is subject to change by the federal government. Excess contributions to a TFSA will be subject to a penalty tax of 1% per month based on the highest excess TFSA amount in that month. The penalty will be calculated on a monthly basis until the excess amount is withdrawn.

Article Disclaimer

The statements contained herein are based on material believed to be reliable, but are not guaranteed to be accurate or complete. The articles do not provide individual financial, legal, tax, insurance or investment advice and are for information purposes only. Graphs and charts, if used, are for illustrative purposes only and do not reflect future values or future performance of any investment. Particular investment strategies should be evaluated relative to each individual's objectives and risk tolerance.

Each insurance policy or contract has different provisions on coverages, benefits, exclusions and limitations. Any policy should be carefully reviewed to determine the rights and obligations of the owner and insured persons. The insurance strategy described is not appropriate for all people. Particular insurance strategies should be evaluated relative to individual objectives and in consultation with a life licensed insurance advisor.

The Toronto-Dominion Bank and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.