Did you know that the average dollar amount of TFSA withdrawals in Canada (per individual) in 2018 was $7,689 and that it was almost as high as the average TFSA contributions of $7,811?*
Many contributors may have used these withdrawals to cover unexpected “rainy days”. What if they were also used for “sunny days”?
Easing the guilt
With the current situation, people feel the need to put some “fun” into their savings versus spending balance. However, they sometimes feel guilty when actually withdrawing from their savings to satisfy a “non-essential” gratification, such as a trip. To help ease their guilt, why not explain that:
- there is a way to plan a dream vacation without jeopardizing their emergency fund or their retirement
- withdrawing from their TFSA will be tax-free
- in addition to their normal annual contribution limit, they will be able to re-contribute the amount used for a vacation the following year (their contribution limit does not apply to amounts re-contributed after a withdrawal).
Vacation spending is covered but there is no immediate liquidity left?
Did you also know that the average unused TFSA contribution room in 2018 was $34,165 and only 9.6% of Canadians maximized their contributions*? Your business potential is still huge!
When liquidity is tight, promote the Periodic Contributions and Indexed Periodic Contributions tool in My Client Space. This new feature allows clients to schedule periodic contributions (also known as “Pre-Authorized Debits” [PADs]) to their RRSP or TFSA and choose the moment, frequency, and amount that best suit their budget! To learn more, click here.
Finally, if your clients haven't used all of their TFSA contribution room, they can indefinitely carry forward unused contribution room so they can contribute later without any problem.
Whenever possible, isn't it more fun to save for a sunny day?
* Source: Canada Revenue Agency, Tax-Free Savings Account 2020 Statistics (2018 contribution year)
