Retirement Savings Frequently Asked Questions
In a world riddled by acronyms, things can get confusing. I’ll keep this post really straight forward and only use one acronym because it will be used multiple times in this post due to the theme:
RRSP – Registered Retirement Savings Plan
What is ‘RRSP Season’?
Typically the dates between January 1 and February 28 (the first 60 days of the year) have been dubbed RRSP Season. This is because any money deposited to an RRSP during this time can be claimed against the tax return you have to file by April 30, 2017. The result is a tax-deferral, which can sometimes lead to a tax refund. For many of our clients, RRSP season is all year long, as they simply contribute on a monthly basis.
If I already have an RRSP at the bank, can open one with you?
Yes. You can have multiple RRSPs accounts, but you do have an overall limit that is governed by the Canada Revenue Agency and is stated annually on your Notice of Assessment after you file your taxes.
How much money can I put into an RRSP?
Typically you can deposit 18% of your income into an RRSP (to an annual limit). Once again, double check with your Notice of Assessment for an exact number.
How much should I contribute?
Something is better than nothing. If you’ve never invested in RRSPs before, we recommend starting with an amount in the $50-$100 range on a monthly basis. Review this amount annually and consider increasing your deposits each year. Those closer to retirement might have to save more than this. A review of your retirement goals should take place to figure out how much money you’ll need saved to achieve them.
What should I do with my tax refund if I get one?
We’ve discussed that in the past and you can see our thoughts on the subject here.
Any questions we missed?
If you have further questions on RRSPs or saving/investing in general, feel free to ask us on our Facebook page here.