Why an RRSP

A few good reasons to contribute to an RRSP

  1. You may get a tax deduction depending on your tax bracket and available contribution room.
  2. Your investment income stays tax deferred while your money remains within your RRSP, and later after you switch to a Registered Retirement Income Fund (RRIF). Your Retirement Income Payments will be subject to Income Tax, and if you decide to receive an amount annually that is in excess of the statutory minimum, your income payments will be subject to tax withheld at source.
  3. Deferred tax is really a zero-interest loan from the government. You won't repay the loan until later in retirement.
  4. You may qualify for a Home Buyers Plan Redemption, allowing you to use a portion of your RRSP to finance a home purchase.
  5. Canadians are healthier and living longer, making the accumulation phase in an RRSP even more important.