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st the tribune tuesday february 10 1998 pi 7 business and finance pay less taxes contribute to a spousal rrsp when one spouse earns more than the other or both spouses earn the same amount but one has a pension plan at work and the other doesnt an imbalance in the amount of income each spouse is saving for their retirement may result if one spouse has accumulated significant ly more money than the other that spouse will be drawing a higher income at retirement and paying income tax at a higher rate reducing the family tax bill is simple the higher income earner should have directed all or a portion of their rrsp contributions to an rrsp in their spouses name this is called income splitting using a spousal rrsp the goal of income splitting is to ensure both spouses have an equal amount of money to draw from at retirement by shifting money from the higher income earner you are reducing that spouses tax rate and thus paying less overall tax the tax deduction for contributions made to a spousal rrsp is taken by the original spouse but the rrsp is owned by the other spouse the owner total rrsp contributions to a personal or spousal plan can not exceed the contributors annual limit hints and tips commonlaw spouses two people of the opposite sex who have lived together longer than a year can also take advantage of spousal plans you can still make a contribution to a spousal rrsp if you are over age 69 under two conditions your spouses age is less than 69 and you still have rrsp contribution room your spouse does not have to earn any personal income in order to set up a spousal plan a spouse can have two rrsps person al and spousal caution tax trouble altead if you are saving money in a spousal rrsp just so you can then withdraw it at your spouses lower rate be warned you may be heading for tax trouble if you contribute to a spousal plan in the year of the withdrawal or two years preceding it the contributions you have deducted during those years are added back to your income and tax in your name special rules apply on death separating or 1 in 1976 now worth 45 cents in the world of investing risk cannot be avoid ed it can however be managed one of the most powerful tools to help manage financial risk is asset allocation or the process of diversifying your investment dollars among differ ent asset classes such as stocks bonds and short- term instruments asset allocation can increase portfolio returns while reducing variability and it lets you customize your portfolio to match your specific investment goals and risk tolerance managing risk familiarizing yourself with risk can help you develop a sound asset allocation strategy two types of risk are investment and inflation investment risk is the chance that your portfolio will lose value due to a market decline asset allo cation can reduce this risk as a decline in the value of one asset class in your portfolio may be offset by the rising return of another resulting in lower vari ability investment risk also tends to diminish with longer holding periods inflation risk the risk that rising prices will reduce the purchasing power of your savings can mean you wont have enough money to retire due to inflation measured by the consumer price index the value of 1 in 1976 is now worth about 45 cents to fight inflation risk consider including growth investments such as stocks in your portfolio tliis article was submitted by dwayne noble at money concepts in uxbridge first annual legacy 5 km run walk in support of markham stouffville hospital sunday april 19 1993 1000 am legacy community at 9th line and hth avenue markham sponsored by minto j tdimnlnfl f i plaxxnxfc m emirson look for your entrypledge form february 21st in the tribune for more information please contact the run hotline at 90s 4727373 ext 3990 joining together to meet our communitys healthcare needs if the funds are used to purchase an annuity or transferred to a regis tered retirement income fund tliis article was 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