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Learn more about RRSPs


RRSP basics for Canadians

A Registered Retirement Savings Plan (RRSP) is the most popular way of saving for retirement in Canada. You can start contributing to an RRSP as soon as you start earning an income, and reporting it to the Canada Revenue Agency, and can continue until December 31st of the year you turn 71 years of age.


How much can I contribute?

Each year, after you file your taxes, the Canada Revenue Agency will tell you what your contribution limit is for the next year. The contribution room is generally quite large and many Canadians usually don’t hit their contribution limit.


For more detailed information, visit our Investment site.


Why buy an RRSP?

In addition to helping you save for retirement, there are two great tax benefits:


  1. An RRSP contribution reduces your income tax. You’ll end up with either a lower tax bill or a higher refund depending on your income.
  2. You don’t pay taxes on the money you earn with an RRSP, until you withdraw it. Until then, it grows tax-free while it’s in your plan. When you’re ready to retire, you’re likely to pay less tax on it because your income is typically lower.


Purchasing an RRSP will help reduce income tax and accumulate tax-deferred savings for your retirement.


I’m too young for an RRSP

Actually, contributing to an RRSP in your younger years makes it a lot easier to save for your retirement later on. Compound interest can grow a sum that you invest at the age of 26 to be much larger than the same sum invested at the age of 36. With The Co-operators, you can start saving as little as $50 a month in an RRSP, so you never have to worry about having enough money to save.


I’m too old for an RRSP

You’re never too old to save for retirement. In fact, most Canadians don’t even start saving until they hit their mid-thirties. You can make a contribution to your RRSP until December 31st of the year you turn 71 years of age, and most Canadians contribute until that date. Those who are starting in their forties, fifties and even sixties can still usually manage to save a good amount of money for retirement. Money in your RRSP is still money saved, and you can use any tax refunds you may receive from your RRSP contributions to save even more.


Spousal RRSPs

While contributing to your partner’s RRSP reduces your own contribution limit, it does give your partner a higher write-off at tax time that can reduce your household income taxes if they have a lower income than you do. Talk to Jennifer Dick, our Certified Financial Planner, about the best strategy for spousal RRSP contribution.


What about the government pension plan?

Fewer people will be working and contributing to the government pension plan as the baby boomer generation retires, so your pension benefits might not be as generous as you expect. You need your own retirement income to supplement a government pension.


How do people come up with money at RRSP time?

Many people contribute smaller regular monthly amounts instead of one large annual lump sum payment. Not only is it easier to budget, but it can also increase the value of the investment faster. Talk to your Financial Advisor about what works for you.


Why buy an RRSP from a life insurance company instead of a bank?

One important difference is the type of investments held within an RRSP. Life insurance companies can offer a secure option called segregated funds. Just like mutual funds, segregated funds are invested in stocks, bonds, and other investments. However, they differ dramatically in that segregated funds guarantee all or most of your principal investment upon maturity or death, while mutual funds generally have no guarantees at all.

If you want to know more, the following websites are great sources of information on RRSPs.


Canada Revenue Agency – RRSPs


MoneySense magazine – Retirement


The Globe & Mail – Retirement and RRSPs


As always, we are here to help!


Contact us today to ask questions and to start saving


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