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Excess contributions pay off

Once you’ve topped up your RRSP, you’re allowed to contribute another $2,000 without tax penalty, as long as you can deduct them in the future. Even though such a contribution would not be deductible from your current taxable income, it would be sheltered from income tax as it grew. See below for how $2,000 extra in your retirement portfolio appreciates over time.

Value of a $2,000 excess RRSP contribution*

Period Accumulated value
After 10 years

$3 754

After 20 years

$7 047

After 30 years

$13 229

After 30 years, if your spouse uses the same strategy, you could accumulate up to $26,450 more, and really enjoy your retirement!

* Calculation based on a diversified portfolio with an effective rate of 6.5% compounded annually.

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