You and your spouse may look on your future retirement incomes as one pot of money to be shared by both of you, but the government doesn’t see it that way. It taxes each income separately. And this creates tax-planning opportunities for you.

For example, Mr. and Mrs. “A” have taxable income in retirement of $60,000, reported entirely by Mr. A. On the other hand, Mr. and Mrs. “B,” also have $60,000, but each reports half of it. Both couples live in British Columbia. Who has the lower tax bill? Mr. and Mrs. B, by about $4,100. With savings like these available, it’s important to begin equalizing family assets now, to optimize your after-tax retirement incomes. A spousal Registered Retirement Savings Plan (RRSP) is one great way to do this. But there are also other ways:

• Shift household expenses. The higher-earning spouse could pay the mortgage, utilities, grocery bills, and even the other spouse’s income taxes. This may allow the lower earner to invest more income and be taxed on the investment earnings at a lower rate.
  
• Pay your spouse a salary. If you are self-employed, you can pay your spouse a salary, as along as it’s reasonable in relation to the duties performed. This way, your spouse can build up an RRSP and non-registered assets, as well as increasing future CPP/QPP benefits.

With professional advice, you and your spouse can develop a plan to help maximize your retirement incomes.