What is an RRSP?
No matter what stage of life you’re in, a registered retirement savings plan (RRSP) is a great way to ensure a financially prosperous future. Using an RRSP to save for retirement is a great way to grow your savings; you only pay tax on your investment earnings when you withdraw from your RRSP, so you can grow your nest egg much quicker in comparison to other types of savings accounts.
Do I Need an RRSP?
An RRSP is a tax-sheltered personal savings plan that is available to all Canadians. This type of savings account is the preferred method of retirement saving for most Canadians, but that doesn’t mean that everyone needs to open an RRSP. Some people may prefer to invest in their future using other methods such as TFSAs, employer-sponsored pension plans, or other types of investments.
Not sure if an RRSP is right for you? Our financial planners can tell you everything you need to know about RRSPs and you help determine whether or not an RRSP will be the best option for your future.
Types of RRSPs
RRSPs come in three varieties: individual, spousal, and group. Individual RRSPs are the simplest type of RRSP – they are set up under one individual’s name and that individual gets access to all of the tax benefits. Spousal RRSPs are great for couples who want to split their income evenly in retirement; this type of RRSP allows an individual to contribute to an account set up in their spouse’s name. The third option is a group RRSP. This type of RRSP is set up by certain employers, and allows employees to contribute to the group plan that is managed by the employer.
Knowing RRSP Rules Will Help Maximize Your Investment
When setting up an RRSP, it’s important to make sure you have a good understanding of the rules governing your retirement savings fund. By understanding the rules and working within them, you can ensure you pay the smallest amount on your RRSP withdrawal tax, and ensure that your contributions are within the RRSP contribution limit and in before the RRSP deadline. You can also learn if you are eligible to use your RRSP investment for other purposes such as buying or building a house through the RRSP home buyer’s plan (HBP).
Want to learn more about RRSPs and find out what they can do for you? Talk to one of our financial planners to find the right RRSP for your needs.