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Better understand the RRSP

Better understand the RRSP

The Registered Retirement Savings Plan, commonly called RRSP, is a way to save now to supplement your retirement income later.

It offers you 2 tax advantages:

  • Your contributions are deducted from your taxable income.
  • The return on your investment is entirely reinvested into your tax-sheltered plan.

Basic RRSP rules

  1. Your RRSP contributions should not exceed a certain percentage of your income. (see How much can you contribute?)
  2. There are 4 types of RRSPs: individual RRSP, spousal RRSP, group RRSP and self-directed RRSP. (see What are the types of RRSPs?)
  3. There are 2 ways to invest: through regular instalments made at your own pace, and cash, at your convenience.

RRSPs are not only for your retirement

They can be used:

  • to buy your 1st property with the Home Buyers’ Plan (HBP);
  • to pay your return to school with the Lifelong Learning Plan (LLP);
  • as a source of revenue in the event of a period of unemployment or parental leave.
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