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  • Writer's pictureDarryl Smith

Is a Joint Savings Account Right for You?


Investing is a great tool to grow your wealth for retirement, and with a knowledgeable advisor you can ensure your investments have the right mix of risk and reward. Retirement planning is a family affair and you will want to be sure you’re both able to contribute to your savings. When both partners wish to contribute, what options are available to you?

What is it?

Joint accounts are very different from joint retirement savings. In Canada, an RRSP can only be held in one person’s name, which means that the investments associated with that account belong to you and you alone. Joint bank accounts, as the name implies, are eligible to be opened with more than one person. This type of account is often used for couples or partners who share payments, are pooling their money for one reason or another, or for individuals who handle the finances for their children or aging parents. The money deposited or withdrawn into a typical joint account is often not intended for long term savings such as retirement.

What you need to know about joint accounts

One of the biggest benefits to having a joint savings account is the ability for more than one person to make deposits and withdrawals, and it also allows easy access for both in case of accident or death. This advantage is also the biggest downfall of a joint account, because with both partners having equal rights to the account, the other party then has rights to withdraw any or all of the funds at any time. This can become problematic if the relationship is no longer amicable or has been terminated. You must also consider that your joint account is considered an asset for both parties, and therefore could be used to pay creditors for one partner’s debt regardless of your own credit or debt standing.

Consider a spousal RRSP instead

There are other options to help both your and your spouse save for retirement AND maximize tax benefits associated with RRSPs. Why not consider a spousal RRSP? Unlike a joint savings account, a spousal RRSP is still held in the name of the individual giving only that person access to the assets within the account. The primary benefit of a spousal RRSP is that it allows you and your spouse to contribute to it to help maximize your savings towards retirement. Additionally, you can max out contributions on both accounts and plan for a more evenly split income upon retirement thereby reducing the impact of tax on income.

If you and your significant other are looking for alternate ways to contribute to a shared retirement plan, consider the benefits of a spousal RRSP as a long-term savings tool as opposed to a standard joint savings account. You can still have a shared chequing account for paying the bills and making deposits and withdrawals, but by adding a spousal RRSP, you are both able to build retirement savings and maximize tax benefits to make the most of your money. Speak with Darryl Smith today at (705) 424- 0562. He will review your plan and find the right solution for both you and your partner, so your retirement savings work best for everyone.

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