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  • Writer's pictureBogress Financial Group

RRSPs - What are they? Should I contribute?

If you're looking for a way to save for your retirement, you might want to consider investing in a Registered Retirement Savings Plan (RRSP). RRSPs are one of the most popular investment vehicles in Canada, and for good reason. In this post, we'll explore the benefits of RRSP investing and why you should consider it for your retirement savings.

Tax-deferred growth

One of the most significant benefits of investing in an RRSP is that your contributions are tax-deductible. This means that you can reduce your taxable income by the amount you contribute to your RRSP. For example, if you contribute $10,000 to your RRSP in a year, you can deduct $10,000 from your taxable income, which can result in a lower tax bill. Additionally, any growth on your investments in an RRSP is tax-deferred until you withdraw the funds.


RRSPs are incredibly flexible investment vehicles, allowing you to invest in a wide range of financial products, such as mutual funds, exchange-traded funds (ETFs), and individual stocks and bonds. You can choose your level of risk based on your financial goals and investment experience.

Higher contribution limits

RRSPs have a higher contribution limit than Tax-Free Savings Accounts (TFSAs). As of 2021, you can contribute up to 18% of your earned income (up to a maximum of $27,830) to your RRSP each year. This higher limit allows you to contribute more to your retirement savings and potentially earn a higher return on your investment.

Spousal RRSPs

If your spouse earns less than you, you can contribute to a spousal RRSP to help them save for their retirement. Spousal RRSPs can be a valuable tool for income splitting, which can result in tax savings when you withdraw the funds in retirement.

Home Buyers' Plan (HBP)

The Home Buyers' Plan (HBP) is a program that allows first-time homebuyers to withdraw up to $35,000 from their RRSP to purchase a home. The HBP can be a great way to use your RRSP savings to invest in your future home, while still maintaining the tax-deferred growth of your retirement savings.

In conclusion, RRSPs offer a range of benefits to investors looking to save for their retirement. From tax-deferred growth and flexibility to higher contribution limits and spousal RRSPs, RRSPs can be a valuable addition to your retirement savings plan. Be sure to consult with a financial advisor to determine if RRSPs are right for you and to develop a retirement savings plan that meets your financial goals.

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