The Benefits of Contributing to your RRSP

by Achieva Financial
Feb February 14

Did you know that the deadline to contribute to your RRSP for the 2017 tax year is March 1st? Because of this deadline, RRSPs are on many people’s minds, but some may be wondering why they should be contributing to their RRSP. Here are the benefits of making contributions:

You are saving for your future

By putting away money for your retirement now, you are investing in your future self. In order to maintain your lifestyle in retirement, you will need approximately 60 – 80% of your working income, and the Canada Pension Plan and Old Age Security alone won’t cut it. The earlier you start saving for your retirement, the longer your money has to grow.

Haven’t started yet? Keep in mind that when it comes to retirement, the best time to plant a tree was yesterday, but the next best time is today.

You will save on your taxes

The funds you withdraw from your RRSP once you retire will be taxed as income, which means the tax you would pay today on that money is returned to you in the form of a tax refund. By contributing to your RRSP, you are increasing your tax refund. But remember, this refund is not “free money”, so re-invest your refund into your RRSP, your TFSA or use it to pay down some debt.

 

Don’t have the money to make a contribution before the deadline? Consider setting up a monthly transfer to your RRSP. Even $10 a month will make a difference over time; remember that any amount you’re saving is better than saving nothing!

Check our Achieva's Retirement Assessment Calculator to see if you're on track to meeting your retirement needs.