The Super Seven ways to save and grow
You already know that one of the best retirement savings strategies for most Canadians is a Registered Retirement Savings Plan (RRSP) — and, as this year’s RRSP contribution deadline nears, here is a super seven list of some of the best ways to get the most from your RRSP. 1. Beat that deadline This year’s RRSP contribution deadline is Feb. 29 — don’t miss it! 2. Maximize always Make your maximum contribution each year — that’s how to get the most in immediate tax savings and in longterm growth.
You’ll find your contribution room on your most recent notice of assessment from the Canada Revenue Agency (CRA). 3. Catch up Fill up unused contribution room.
You can do that in a single year or over a number of years until you reach age 71. 4. Rise up To have more money in retirement, raise your RRSP contributions as your income rises. 5. Borrow to save An RRSP loan can be a good option for maximizing this year’s contribution or catching up on past contributions but only if the interest rate is low and you pay it back as quickly as possible.
A good way to do that: Use your RRSP tax savings to help pay off the loan. 6. Diversify for growth Your maximum RRSP contributions are capped by the government - so to get the additional income you’ll likely need to enjoy the retirement of your dreams, be sure to invest in a Tax-Free Savings Account (TFSA) and a well-balanced non-registered portfolio based on an asset allocation plan that matches your risk profile and time horizon. 7. Designate Choose a beneficiary for your RRSP (in Québec, this must be done through a will). Generally, RRSP assets with a beneficiary designation do not form part of your estate and do not attract probate fees. If your beneficiary is your spouse/partner or a disabled child/grandchild, your RRSP can be transferred tax-deferred to your beneficiary’s registered plan.
Saving for retirement is an absolute necessity - and an RRSP is a great way to do just that when it’s part of an overall financial plan tailored to achieve your retirement dreams. Talk to your professional adviser.