Making CPP Work Better for You: A Powerful Roadmap to Retirement Success"

Several business owners admit they would like to donate to charity, but they feel what they could donate wouldn’t make a difference. I will introduce you to a concept that will change your opinion. There are many sources of retirement income; one component is the Canada Pension Plan (CPP) retirement benefit. While it might be essential for some, many business owners, especially those who have sold their business or other corporate assets, find that CPP won't substantially impact their retirement income. In fact, for those with significant retirement income, CPP can even be taxed at the highest marginal rate. So, the question isn't "Should I take CPP at 65 or 70?" It's more about "What's the smarter thing to do with my CPP benefit?"

This dilemma led me to explore a groundbreaking strategy called CPP Philanthropy™, which has the potential to transform your CPP benefits into a lasting legacy. I am fortunate to be coached by Mark Halpern, a leading expert in estate planning and philanthropy in Canada, who introduced me to this game-changing concept.

CPP Philanthropy™ allows you to leverage your monthly CPP benefits to fund a permanent life insurance policy, creating a substantial windfall for your family and the causes you hold close to your heart.

Let me illustrate how this strategy can work wonders:

Imagine a 65-year-old couple receiving a combined CPP benefit of $26,000 annually, taxed at the highest marginal rate of 53.5% in Ontario.

Strategy #1: Life Insurance Policy Owned Personally, Tax Savings Later

With CPP Philanthropy™, you can use your CPP benefits to pay premiums on a joint-and-last-to-die life insurance policy worth $1.4 million. In the event of the second spouse's passing, the charity you choose as the beneficiary receives the insurance payout. Here's the magic part: your estate will receive a donation receipt for $1.4 million, saving your family a substantial $700,000 in taxes.

Strategy #2: Life Insurance Policy Owned by Charity, Tax Savings Now

Similarly, CPP Philanthropy™ allows you to create a charitable gift of $1.4 million using joint-and-last-to-die life insurance, with the charity as the policy owner and beneficiary. By utilizing your CPP benefit to pay the policy premiums, you receive an annual charitable donation receipt of $26,000. This effectively offsets the tax payable on the pension benefit, replacing it with a generous gift to the charity of your choice.

Strategy #3: Donate RRSP/RRIF By Will or Beneficiary Designation

The RRSP/RRIF funds, when fully taxed as income upon the second death, can take a significant toll (up to 53.5% in Ontario). Here's where CPP Philanthropy™ works its magic once more. You can mitigate the tax burden by designating a charity as the beneficiary of your RRSP/RRIF. To replace the $460,000 that would go to your family, you can use part of your CPP benefit to fund a $500,000 life insurance policy to cover the tax liability. Alternatively, you can invest your entire CPP benefit into a $1.4 million joint-last-to-die insurance policy with your family/estate as the beneficiary. Upon the second death, the insurance policy pays out $1.4 million tax-free to your family, providing an additional $940,000 compared to the RRSP/RRIF alone and a significant gift to charity.

CPP Philanthropy™ boasts compelling financial metrics and serves as a powerful example to your children and future generations of the importance of charitable giving. It's a legacy planning approach that leaves a lasting impact beyond just financial benefits.

If you're intrigued by the potential of CPP Philanthropy™ and how it can empower your retirement planning while making a meaningful difference in the world, we'd be thrilled to discuss this strategy further.

Let's build your legacy together through CPP Philanthropy™!