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Retirement

Take out an RRSP - It's never too early or too late

Setting up a Registered Retirement Savings Plan (RRSP) as part of your financial plan is one of the first steps in retirement planning. Ideally, this should be done many years before retirement. New savers often wonder when is the best time to start contributing to an RRSP. Whatever your situation, setting up a retirement savings plan as soon as possible should be a priority. An RRSP is a long-term investment vehicle. Contributions accumulate tax-free; the earlier you start and the longer you contribute, the greater the value of your RRSP. Making regular, lump-sum payments is an excellent way to get started, even if contributions are small at first. By reducing the impact of market fluctuations, these regular contributions make it possible to worry less about market volatility.

  1. Start contributing as soon as possible, and contribute as much as you can each year. If you don’t use all the contribution room allocated to you for the current year, remember that you can carry forward unused contribution room to future years. What’s more, if you make contributions but don’t immediately use the corresponding tax deduction, you can carry the deduction forward and use it in future years.
  2. Instead of making a single contribution each year, just before the RRSP contribution deadline, set up a monthly pre-authorized chequing plan. That way, you won’t have to come up with the money at the last minute, and you’ll benefit from the tax-sheltered growth of contributions made throughout the year.
  3. If you receive a tax refund from the Canada Revenue Agency (CRA), treat it as a contribution and deposit it into your RRSP so the money starts growing right away.
  4. Build your RRSP portfolio with different types of investments to benefit from a plan that balances guarantees and growth.

Whether you have a few years or a short time left before retirement, there’s always time to start contributing to an RRSP. Ask your advisor about the different RRSPs available from Assurancia.

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