RRSPs? What are those?

The Registered Retirement Savings Plan (RRSP), is a personal savings plan that lets you save money over your lifetime on a tax-sheltered basis, so your money grows faster.

Who should invest in an RRSP?

• Canadians under 71 years of age who earn employment income and want to save for retirement by reducing their tax bill

• Great for long-term retirement goals and generating ongoing income in your later years

• Best suited for medium to high income earners
  
  

Reasons why you should invest in an RRSP:

Tax-deductible contributions

• Claim your RRSP contributions as a deduction on your tax return

• Can carry forward deduction from contribution to future years when income might be higher
  
  

Tax-free growth

• Won't have to pay any taxes on investment gains as long as it remains in the RRSP

• Allows retirement savings to grow faster
  
  

Generate retirement income for stability

• When you're ready to retire, you can convert your RRSP to a RRIF or annuity to receive regular payments

• Income from the RRIF will be taxable but in your later ages, you will potentially be in a lower tax bracket and pay less tax
  
  

Spousal RRSP benefits

• Split income in the household by contributing into spousal RRSP

• Retirement income can be split more equally between you and your spouse, generating a reduced amount of tax that the higher income earner pays
  
  

Government withdrawal benefits

Make withdrawals without paying any tax if you pay the money back within the specified time periods for:

• Home Buyers Plan – withdraw from your RRSP to contribute towards your first home purchase

• Lifelong Learning Plan – withdraw from your RRSP to contribute towards education costs

It is always best to consult a licensed financial advisor when considering whether RRSPs make sense for your financial plan. Depending on your personal situation, contributions to your Tax-Free Savings Account (TFSA) can sometimes be a better option.

Wondering if an RRSP fits into your financial plan? Contact us at info@bogressfinancialgroup.ca for a complimentary financial review.