Tax tip - The Canada Revenue Agency's Tax-Free Savings Account tips: What you need to know

Tax tip - The Canada Revenue Agency's Tax-Free Savings Account tips: What you need to know

A wise man, Richard Shillington, is writing a book on retirement for the rest of us. Watch for it this year. His premise before RSP's was that if you didn't have $100,000 in an RSP you shouldn't have one at all as it would diminish your other benefits such as reductions in Medical premiums for provincial plans, GIS income, and would increase the cost of your care as you are required to include at least a minimum amount in your income each year after 71 years of age.

It will be interesting to see what he says the figure should be now that we're in the third year of TFSA's. I suspect we shouldn't have an RSP unless we have well over $100,000 in one.

Have you opened an account yet to shelter your loose savings from tax on the interest income? That's a perfect use of this vehicle to get you started. Just throw it in either a high interest savings account or a GIC (Term Deposit) on a rate riser plan and watch it grow. If you need it, you can always remove it, but out of sight, out of mind, maybe that's a good thing.

Check out ING and your local credit union for the best rates for those types of savings and start now, even if it's not the full allowable amount. Habits are hard to start but harder to break.