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The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

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Freedom 55 Financial is a division of The Canada Life Assurance Company and the information you requested can be found here.

Retirement savings for blended families

Key takeaways

  • Over 10% of Canadian familiesOpens a new website in a new window are considered blended or stepfamilies.  
  • Remarrying or entering another long-term relationship requires financial planning, especially when it comes to retirement.
  • Things to think about include how you’ll merge your existing retirement savings, how you’ll continue to contribute, and how to access this money tax-efficiently when the time comes.

Build your vision for retirement together 

Getting married prompts a lot of conversations about money, from how you’ll budget day-to-day to how you’ll plan for retirement together

A first step is to think about what that picture of retirement looks like: 

  • Do you envision a more relaxed, laid-back retirement, or do you want to use this phase of life to try new things?
  • Do you plan to travel in retirement? 
  • Do you plan to stay in Canada or retire part- or full-time abroad
  • Will you plan to work part-time in retirement, or live off investments and retirement income?

If you have children from previous relationships, you may have more to think about when it comes to how these and other decisions are made. 

For example, if your children and/or stepchildren are at an age where they may need financial support, that could impact how much money you have to put towards your retirement goals. 

This could especially be the case if your remarriage or new partnership has created a family with wider age gaps between children, which could result in needing to pay more over the long-term. If you plan to add to your family, you may have the costs of things like childcare to think about on top of the needs of your children and stepchildren. 

Getting a sense of how this new family dynamic combines with your desired lifestyle in retirement will help you start planning to save for it.

Merging existing savings 

If you’re remarrying or entering a new partnership, you may already have savings set aside for retirement via a Tax Free Savings Account (TFSA), a Registered Retirement Savings Plan (RRSP) or a workplace pension. 

Something to discuss is whether you plan to withdraw and combine any of this money into new savings accounts, or if you want to keep this money separate and start new accounts to continue saving together. You may want to try a combination of both your own and shared accounts, such as keeping an existing TFSA while opening a joint spousal RRSP. 

It’s also important to look at who will be the beneficiaries on these accounts, and to make changes where necessary to ensure they’re up to date. 

You may also have other plans to generate retirement income, such as selling your home and/or downsizing in retirement. If this is the case, you should discuss any potential repercussions for your children and stepchildren, such as how this may affect their plans to live with you to perhaps save for their own home or any impacts on inheritance

Accessing retirement income 

When thinking about how to combine efforts when putting money into your retirement savings, it’s important to consider how you’ll take it out when the time is right. 

You may want to discuss what age you’d like to retire, especially if blending your families has increased your current financial obligations. If you now have stepchildren or in-laws that require financial support in addition to your own parents and kids, this could impact how much you’re able to save towards retirement.

As a result, you may want to look at the possibility of working for a little longer to replace this income. You could also look at ways to save more now to help close this gap and prevent working into your retirement years. 

When it comes to receiving your retirement income, it’s a good idea to think about the options available to you to help lower the tax you’ll pay on it, such as pension income splittingOpens a new website in a new window or claiming the pension income tax creditOpens a new website in a new window.

Help protect your savings

It’s important to put a plan in place to help protect the wealth you’ve generated as well as your assets. 

When you blend families, you should create a will that reflects new beneficiaries and changes to how you’ll divide your estate. This is especially important if your children and/or stepchildren are under the age of 18. Although it’s possible to create a will yourself, working with a lawyer is recommended to help you navigate complexities that can come with blending families  

What's next?

  • It’s a good idea to discuss what your goals are for retirement to work out how you’ll achieve them whilst meeting the financial needs of your expanded family.
  • Working with an advisor can help you plan for retirement with confidence.

This material is for information purposes only and shouldn’t be construed as providing legal or tax advice. Every effort has been made to ensure its accuracy, but errors and omissions are possible. All comments related to taxation are general in nature and are based on current Canadian tax legislation and interpretations for Canadian residents, which are subject to change. For individual circumstances, consult with your tax, legal or accounting professionals. This information is provided by The Canada Life Assurance Company and is current as of date of publication.  

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