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BMO Bank of Montreal

February 17, 2012 08:00 ET

BMO Retirement Tips of the Day: Be Generous But Don't Give Away Too Much During Your Life & Spend During Your Retirement-But Do Some Planning First

TORONTO, ONTARIO--(Marketwire - Feb. 17, 2012) - As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement…And How To Rescue It.

Tip Number 33:

Be Generous But Don't Give Away Too Much

You have had a good life, and now you want to help your children and/or grandchildren financially. Your heirs will inherit your money anyway, but you still want to help them while you are still alive. While this is a noble view, keep in mind that retirement can last 30+ years; you need to start thinking more about your future and how much money you will need, rather than how much you should be giving to the kids. There are ways to be generous and still be mindful of your retirement savings. Consider the following:

  • Rather than cash, give away personal property or family heirlooms during your lifetime.
  • If you want to help fund a grandchild's education, consider contributing to a Registered Education Savings Plan (RESP). One of the important features of the RESP is that you can take back your contributions should you be in the unfortunate situation of needing the money during your retirement years.
  • Draft a loan - document the fact that a loan has been given to a family member and ask for a demand promissory note.
  • Consider registering a mortgage on the home you helped your child to buy
  • Document large gifts and amend your will to take the gift(s) into account when dividing the estate among the beneficiaries.

Tip Number 34:

Spend During Your Retirement, But Do Some Planning First

You have worked hard to accumulate personal savings for retirement and now that you are retired, why should you hesitate to spend the money? However, spending your retirement savings comes with a myriad of fears and decisions. Consider the following when deciding how much to spend:

  • If you are concerned about outliving your money, investigate investment products that guarantee income for life.
  • Determine how important it is for you to leave an estate and decide how much you would like to leave.
  • Assess whether you can afford to leave a legacy and, if not, discuss, with your financial advisor options to create an estate by using life insurance products.
  • Have an open dialogue with your children about your wish to leave an inheritance- you may find your children would rather you use the money during your lifetime.

For more information on retirement: www.bmo.com/retirement.

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