By Presented by Lawton Partners Wealth Management - Darcie Doell, Financial Advisor

Planning for Retirement

Five Reasons for an RRSP

Feb 8, 2019 | 9:30 AM

Presented by Lawton Partners Wealth Management

Darcie Doell, Financial Advisor

Making sure that your retirement income is enough to suit your needs in later life can be a difficult business and unfortunately relying on workplace or government retirement plans often does not cut it. Using your own savings is therefore a reality for many Canadians. Fortunately, an effective savings plan can help you to save with confidence for the future. There are some great reasons to open a Registered Retirement Savings Plan (RRSP) to save for your retirement.

Here are the top 5 reasons to open an RRSP:

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Contributions are tax deductible

You can claim your RRSP contribution as a deduction on your tax return and even carry forward unused space to a future year where you may have a higher income. All of this combined means that your retirement savings pot can grow even faster.

Savings grow tax free

You won’t pay any tax on investment earnings as long as they stay in your RRSP. This tax-free compounding allows your savings to grow faster.

Convert RRSP to receive regular payments

You can convert the money saved in your RRSP into a RRIF or annuity when your time comes to retire (or at age71,whichever comes first). You’ll pay tax on the regular payments you receive each year- but if you’re in a lower tax bracket in retirement, you’ll pay less tax.

Spousal RRSP can reduce your combined tax

Reduce your combined tax burden. If you are married and you earn more money that your spouse, a spousal RRSP may benefit you as you can add to their tax-free savings to build a joint retirement income which is likely to mean that you pay less tax in the long run.

Borrow from RRSP to buy your first home or pay for your education

You can borrow money from your RRSP to buy your first home using the Home Buyer’s Plan (HBP) or to pay for your education Lifelong Learning Plan (LLP), you can take out up to $25,000 (HBP) or $20,000 (LLP) respectively from your RRSP to fund it without paying tax on the withdrawals (providing that the money is paid back within the specified time).

For more information contact Lawton Partners Wealth Management 306-922-2020.