Tips to make the most of your RRSP

Por Mauricio Dreher

Saving for retirement doesn’t have to be challenging. Here are some tips:


Define your retirement goals

What kind of lifestyle do you want to live in retirement? Start making goals now to ensure your security as you enjoy a long and fulfilling retirement.


Invest early for better growth

Investing in your RRSP well in advance of retirement means that your money has more time to benefit from tax-sheltered growth. Since money invested in an RRSP is taken from pre-tax earnings, making contributions can reduce overall income taxes by deferring them to a later date, at which time you may be in a lower tax bracket.

Tax refund

Making contributions to your RRSP is most beneficial when your marginal tax rate at retirement is expected to be lower than your tax bracket during your working life. Remember that RRSPs aren’t tax-free, they are tax deferred, so as tempting as it might be to spend your tax refund, reinvesting it will work to your long-term advantage.


Elderly female hands with RRSP egg

Elderly female hands with RRSP egg

Contribute now… Deduct later

You don’t have to claim deductions on your RRSP contributions in the same year that you make them. If you are expecting a future increase in taxable income that will push you into a higher tax bracket, you may defer claiming deductions until later to benefit from a higher tax refund.


More room to invest in your future

Excess contribution room left over from contributions made under the annual limit can be carried forward for use in future years. Take advantage of the additional contribution room to invest more toward your retirement and benefit from a larger tax refund.

Choose the account that’s right for you


Depending on your short and long term goals, investing in a Tax Free Savings Account (TFSA) could be better suited for you. Contributions made to a TFSA are not tax deductible, so you won’t receive a tax refund; however, withdrawals aren’t taxed either. The money you invest will grow tax free for as long as it remains in the account.

Lighten the tax load

Income splitting is a way for couple to reduce overall taxes in retirement. In the case of RRIFs, this can be done if you are 65 or older. It involves shift up to 50% of eligible pension income from a higher income spouse to a lower income spouse. Income splitting can also be achieved before age 65 through the use of spousal RRSPs, although you need to watch out for attribution rules.

* Source: Fidelity Investments

The statements contained herein are based on material believed to be reliable and is for general information purposes only. Where such statements are based in whole or in part on information provided by third parties, they are not guaranteed to be accurate or complete. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

Mauricio Dreher

MauriciCFP has more than 15 years’ experience in the financial industry, having an internationally recognized certification as Certified Financial Planner. He works with Canfin Financial Group, offering Investments, Insurances, Mortgages, with emphasis in Tax Savings Strategies. Bus: (877) 422-6346 ext. 528 or Cell: (416) 876-3644.

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