minimizing tax at death rrsp
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Women are more likely than men to put their careers on hold to care for a loved one, and they’re saving less as a result.

“Many more women than men put their careers on hold, reduce hours or give up advancing their careers to care for kids,” said Kathleen Woodard, senior vice-president, CIBC Imperial Service, in a Feb. 27 interview.

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“We’re [also] seeing a growing number of women make similar sacrifices later on in life to care for a spouse, an aging parent or even a sibling. And so, of course, this has a direct impact on women’s earning power and savings.”

By age 55, women have saved half as much as men, according to a CIBC poll, and they also outlive men by about four years on average.

“Women live longer [and] they’re likely to face higher healthcare costs,” Woodard said. “And that means they’re going to have to make more from less. Women need to think about planning for retirement differently, and adopt different strategies.”

Woodard provided these tips for advisors to help their female clients.

  1. Explain how to utilize spousal RRSPs

*The spouse can use some of their RRSP contribution room and get the deduction in their name while making the contribution in the woman’s name.

Balancing savings now can help with income-splitting opportunities down the road, said Woodard, “so that you’re paying the least amount of tax possible in retirement.”

  1. Speak in plain language.

The CIBC poll found that women tend to be more conservative investors than men.

Advisors should avoid using jargon when explaining investment concepts, Woodard said. Instead, demonstrate how investing for the long term will help female clients with their goals and how it will impact their families.

“Walk them through the benefits of investing regularly and in a well-balanced, well-diversified portfolio. [Talk] through the merits of asset allocation and [make] sure that equities are an important component for a long-term investment plan.”

  1. Tell her to share costs with her spouse.

“We’re actually seeing more young couples now splitting parental leave to limit the career impact on one spouse alone, and also to take advantage of dual employer benefits,” said Woodard.

  1. Remind her about tax credits. 

If your client is caring for an aging parent, she should consider some of the tax credits available, like the Canada caregiver tax credit.

The credit is available if a child, grandchild, parent, grandparent, sibling, uncle, aunt, niece or nephew relies on your client for support due to a physical or mental impairment. The amount your client can claim depends on her relationship to the person, her circumstances, that person’s net income, and whether other credits are being claimed for that person.

“Those are a few examples of great advice that advisors can give specifically tailored to women as they think about their financial futures,” Woodard said.

This article is part of the AdvisorToGo program, powered by CIBC. It was written without input from the sponsor.

*Correction: A previous version of this story contained incorrect information about spousal RRSPs. Return to the corrected sentence.