Kim, a highly successful business owner running a thriving consulting firm, approached WiseInvest™ seeking new ways to save taxes and optimize her surplus funds. Each year, Kim redeemed part of her company’s profits to contribute to her RRSP and TFSA for retirement. However, after discussing her ideal retirement age and desired after-tax income, we discovered there might be a more tax-efficient retirement strategy.
Examining Two Approaches
- Personal Redemption
- Kim withdraws corporate surpluses, pays personal taxes, then invests in her RRSP and TFSA.
- This method reduces the corporation’s capital but results in significant personal tax outlays before the money is even invested.
- Corporate Investment
- Kim keeps surplus funds within the corporation, leveraging a corporate life insurance that can grow more effectively.
- She eventually receives retirement cash flow through borrowing plans designed to minimize tax, leaving more money to work for her.
The Comparison
After running several retirement scenarios, the difference was striking. By avoiding extra personal taxes and allowing corporate investments to accumulate, Kim could:
- Fulfill her retirement income goals with roughly one-third of the funds she would have needed under the personal redemption approach.
- Enjoy more reliable cash flow in retirement.
- End up with a larger after-tax estate, thanks to reduced taxable withdrawals and strategic reinvestment within the corporation.
The Outcome
Kim was thrilled to see how a tax-efficient retirement strategy could preserve more of her hard-earned money and still provide the comfortable retirement lifestyle she envisioned. If you’re a business owner wanting to optimize your retirement approach, contact WiseInvest™ today to explore how business retirement plans and innovative corporate investment methods can secure your future—without sacrificing unnecessary taxes.
*Note: For privacy reasons, the names and nature of our clients’ businesses have been changed.
Our Process
UNDERSTANDING YOUR NEEDS
Discovery Phase
We start by listening, getting to know your goals, challenges, and opportunities. This is where we lay the foundation for a strategy that truly fits you.
1
DESIGNING A TAOLORED PLAN
Planning Phase
With a clear picture of your needs, we craft a customized plan designed to grow, protect, and transfer your wealth efficiently.
2
BRINGING THE PLAN TO LIFE
Implementation Phase
We put the strategy into action, ensuring everything is executed smoothly and effectively. We're with you every step of the way.
3
STAYING ON TRACK
Review Phase
Life changes, and so should your plan. We conduct regular reviews to adjust and refine your strategy, keeping you on course toward your financial goals.