Promises, promises: TFSA boost for seniors

You take one day out of the office to attend an alternative investments conference, and what happens? Probably the biggest financial planning-related election promise the campaign will see is announced.

Yes, the Conservatives rolled out an offer on Thursday to double the contribution limit on the TFSA to $10,000 per year, to be implemented once they get the deficit under control. That’s projected to be in either 2014 or 2015.

This caught the headlines, as intended, but it has been pointed out that very few Canadians will be able to set aside a spare $10,000 a year—most already struggle to find the $5,000 it takes reach the current limit.

So the immediate reaction is that this only benefits the wealthy. But it also benefits retirees, who must withdraw a mandated minimum from their RRIFs, regardless of the tax consequences. For seniors who must withdraw more than they actually need, the increased TFSA limit would allow them to tuck away up to $10,000 to generate tax-free income, or fund a legacy.

From a financial planning perspective, the TFSA increase is great news. What it might do to the nation’s finances is beyond the purview of this series.

The Liberals appear to have finished their platform roll out, with little new since the Family Pack was announced on Sunday.

Earlier this week, the NDP announced an Inter-generational Forgivable Loan Program, aimed at home renovations required to allow an aging relative to move in.

With most policy announcements either made last week, or turning to non-pocketbook issues—policing, defence—there’s really only one point to be awarded in the Promises, promiese derby. One point to the Conservatives on the TFSA promise.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.