As Financial Literacy Month comes to an end, a recent report issued by the BMO Wealth Institute reveals a significant number of Canadian Boomers (those aged 45+) lack knowledge of key personal finance topics that can impact their income during retirement, and underscores why financial literacy remains a life-long pursuit.
The report noted that only a small percentage of Boomers know how best to maximize their tax savings, leaving them vulnerable to having benefits and credits such as Old Age Security (OAS) and the Age Amount tax credit clawed back.
Among the report’s key findings:
> Seventy-nine per cent of Canadians aged 45+ either answered incorrectly or did not know how dividend income and capital gains are treated from a tax perspective.
> More than one-third (34 per cent) either answered incorrectly or did not know how interest income is treated from a tax perspective.
> Forty-one percent did not understand the tax implications of making a withdrawal from a Registered Retirement Income Fund (RRIF).
“Boomers have been spending the last 40 years saving for retirement. However, they’re now entering a new phase of their lives and the focus will change from saving to spending in retirement. This brings a whole new set of considerations in terms of how they efficiently manage their money,” says Chris Buttigieg, senior manager, wealth planning strategy, BMO Financial Group