Strategic Financial Planning with Bellwether Family Wealth to Avoid OAS Clawback

Effective financial planning is crucial for retirees who wish to avoid or minimize the impact of the OAS clawback. Bellwether Family Wealth offers strategic financial planning services to help clients navigate the complexities of retirement income and optimize their financial position. Here are some key strategies and considerations to avoid the OAS clawback in 2024.

Income Splitting

  1. Pension Income Splitting: Retirees can split eligible pension income with their spouse or common-law partner, which can help reduce individual taxable income and avoid crossing the OAS clawback threshold.
  2. Spousal RRSPs: Contributing to a spousal RRSP allows for income to be withdrawn by the lower-income spouse, reducing the higher-income spouse’s taxable income.

Tax-Efficient Investment Strategies

  1. Dividend Income: Investments that generate eligible dividends can be advantageous, as dividends are taxed at a lower rate than interest income.
  2. Capital Gains: Focusing on investments that produce capital gains rather than interest can also help manage taxable income. Capital gains are only taxed when realized, providing flexibility in timing.

Registered Accounts

  1. TFSAs: Withdrawals from TFSAs are not considered taxable income and do not affect the OAS clawback. Maximizing TFSA contributions can provide a tax-free income stream in retirement.
  2. RRSPs and RRIFs: Careful planning of RRSP contributions and withdrawals is essential. Converting RRSPs to Registered Retirement Income Funds (RRIFs) at the appropriate time can help manage income levels.

Timing of Income

  1. Delaying CPP and OAS: Delaying the start of Canada Pension Plan (CPP) and OAS benefits can result in higher payments and can be strategically timed to avoid higher income years.
  2. Deferring Other Income: Income from employment, business, or other sources can sometimes be deferred to future years when income might be lower.

Utilizing Tax Credits and Deductions

  1. Medical Expenses: Claiming eligible medical expenses can reduce taxable income.
  2. Charitable Donations: Donations to registered charities provide tax credits that can reduce taxable income.

Professional Guidance

  1. Personalized Financial Plans: Bellwether Family Wealth offers personalized financial plans tailored to each client’s unique situation, helping them navigate the complexities of the OAS clawback.
  2. Ongoing Monitoring: Regular reviews and adjustments to the financial plan ensure that clients remain on track to meet their financial goals while minimizing the impact of the OAS clawback.

Strategic financial planning with Bellwether Family Wealth can help retirees effectively manage their income and avoid the OAS clawback in 2024. By utilizing tax-efficient strategies, income splitting, and careful timing, clients can optimize their retirement income and enjoy a secure financial future.

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