Doctors across Canada are feeling the heat this spring and summer in more ways than one!
April’s budget proposal to increase the capital gains inclusion rate threw many doctors’ retirement plans into chaos. It’s freaking people out. I’m hearing more comments from doctors concerned they won’t be able to retire.
I totally understand your frustration.
You’ve saved and planned for your retirement, and as it starts to come more in focus the goal posts get moved on you.
Worse yet, the increase to the inclusion rate is effectively a retroactive tax on all your taxable savings since they just became more expensive to access.
There’s A Way Through This
But while retirement just became more expensive, the actual impact is your draw down rate needs to increase as you withdraw more to account for more taxes.
Unless you were going to retire on a knife’s edge— what this increased drawdown really means is there’s less to your estate both through the higher withdrawal rate and ultimately the taxes payable to your estate.
But Wait! There’s Still Good News Here!
By using some key financial strategies to your retirement plan…
Your ability to retire is likely unaffected.
And there are many strategies we can employ to reduce the inclusion rate impact, such as:
- Considering dividend paying stocks,
- Matching gains with losses
- Structure tax-free retirement income from your Prof Corp that bypasses the budget’s impact entirely.
This is the good news I’ve been able to share with my doctors, and we’ve already taken steps to deal with the actual impact to their estate.
Want to be able to retire with confidence and not worry about the budget?
You don’t have to figure out this CRA stuff on your own.
Enjoyed this article? I’d love to hear from you! I’m always interested in hearing about the unique financial situations doctors have. Send me a note!
