RRSP's made easy
Tuesday January 16, 2018
Putting off making RRSP contributions? It’s tempting! Especially when retirement seems so far away. After all, life is for living—in the moment! Still, getting an early start on an RRSP brings with it a host of benefits that you can enjoy well before old age!
The advantages: more than just tax credits
The biggest advantage of a registered retirement savings plan (RRSP) is, of course, building up a financial cushion that will let you enjoy a comfortable retirement. Too soon, you say? In fact, making RRSP contributions brings other, lesser-known benefits. Like:
- Reducing the amount of income tax you pay each year, since RRSP contributions are tax deductible.
- Letting you buy or build your first home. Thanks to the Home Buyer’s Plan (HBP), you can use money from your RRSP to make your down payment—a sum that can be otherwise difficult to get your hands on.
- Thanks to the Lifelong Learning Plan (LLP), money in your RRSP can also be used to finance your studies or go back to school.
In other words, your RRSP can help power up your dreams and plans, thus improving your short‑, medium- and long-term future prospects.
Never too soon to save!
You can continue to build your RRSP throughout your working life, right up to age 71. Keep in mind that your contributions can’t exceed your yearly limit, set at 18% of your income.
Unused sums? You can carry them forward to the following years. Taken together, these sums—i.e. amounts uncontributed since 1991—are known as your "contribution room."
Keep in mind, too, that you can also contribute to the RRSP of your spouse or common-law partner while still benefiting from the tax credit. Useful to know if you expect to be the higher earner or if you’ve reached your contribution limit.
Investment vehicles to suit every preference
If your savings are going to grow, they need to be intelligently invested. Fixed interest rates, variable market-linked returns, term savings, GICs, guaranteed market-linked investments, mutual funds . . . There’s a dizzying array of products out there, some of which are sure to suit your needs. Your advisor can help you choose the most appropriate investment for your situation, goals and tastes.
Never too soon to start contributing!
Here’s a smart tip. Make regular contributions—for example, with every paycheque or on a monthly basis, depending on your budget. Even a small amount is better than nothing, since your savings will grow over time, regardless of how much you deposit. Got a raise? Great! It’s the perfect opportunity to hike up your contribution. And there you go: year after year, with seemingly no effort, you’ll have amassed a considerable stash.
Need help? Your UNI advisor will work with you to identify your best approach to savings. Click here to contact us!
Mutual funds are sold and distributed by Acadia Financial Services Inc. Acadia Financial Services Inc. is a wholly-owned subsidiary of Financière Acadie Inc. which is itself a wholly-owned subsidiary of the Caisse populaire acadienne ltée. * Commissions, trailing commissions, management fees and other expenses may all be associated with mutual fund investments. Please read the prospectus or the Fund Facts before investing. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. Unless otherwise stated, mutual fund securities and cash balances are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions.