Who would benefit the most from being part of an individual pension plan?

The individual pension plan (IPP) is designed primarily for high-income earners, particularly those in their 40s and 50s, who are looking to bolster their retirement savings significantly. In this scenario, Michael, who is 53 years old and earns $125,000, stands out as the one who would benefit the most from an individual pension plan.

The structure of the IPP allows for larger contribution limits compared to other retirement savings vehicles, such as RRSPs. This is particularly advantageous for someone like Michael nearing retirement age, as he has a higher income and potentially fewer working years left to save for retirement. Given his age, he can benefit from the higher contribution limits, which can help him maximize his tax-deferred savings before he retires.

While the other individuals listed may also use retirement accounts effectively, Michael's higher income and age place him in a position where he has the most to gain from the unique tax advantages and higher contribution allowances of an individual pension plan. This strategy helps him to build a substantial retirement fund in a shorter time frame, which is particularly crucial for someone at his stage in life.