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Registered Retirement Savings Plan (RRSP)

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It’s never too early to start thinking about how you’re going to spend your retirement, and part of that is figuring out the finances. Once you retire your income will likely change drastically so it’s important to have some cushion so that you can still enjoy your life and maybe travel a little. One of the ways you can save for your retirement is by investing in an RRSP plan, or a Registered Retirement Savings Plan Brampton. This plan is registered with the government, and you can make contributions each year by purchasing eligible investments. These investments will count as an income tax deduction and any return on investments are typically exempt from tax as long as they remain within the plan. These funds, normally, are not withdrawn from the plan until retirement. When you retire you can either withdraw the money, though you will be required to pay tax on what you withdraw, or you can move them to other investments of your choice.

Who needs an RRSP?

RRSPs may not be right for everyone, and that’s ok. If you work part-time or for a company that doesn’t offer pension plans then you might want to consider having your own retirement plan. You can also decide to invest in an RRSP policy if you believe the pension you will have will be inadequate when it comes time to retire. We can help you determine if an RRSP is right for you, and how much you’ll need to invest so that you can enjoy your golden years without added financial stress.

Can I choose what I invest in?

Absolutely! There are set options, of course, that you can choose from depending on the amount of risk you’re comfortable taking and how far from retirement you are. The more working years you (likely) have left when you start investing the more risk you can afford to take. The investment types and style you choose though is always up to you. We can help guide you and answer any questions you might have so you can make the right choice for you and your future.

What other benefits do RRSPs have?

If you start investing in an RRSP when you first start working full-time then you’ll likely have a big chunk of money sitting there early on. In Canada, the government allows first time home buyers to withdraw a portion of their RRSP investments to use as a down payment on a home. You can only borrow up to a certain amount, and the funds need to have been invested for at least 90 days before withdrawing them. The money will be tax-free as long as you pay it back within 15 years. Investing early on, while you are still renting or even living at home with family, can help build a great foundation for your life. You can also use your RRSPs, to a maximum of $20,000, to finance Life Long Learning. This program allows the use of RRSP investments to be withdrawn tax free when put towards education. If this is a path you’d like to explore, we’d be happy to sit down with you and determine if your plan meets the requirements of the Life Long Learning Plan. Planning for your retirement is an important part of your working years. You want to make sure you can enjoy the time you’ve worked so hard for, and not be burdened by the stress of financial uncertainty. Contact Harpreet Puri to make sure your financial future is where you want it to be. If not, we can help you get there!

FAQ

Yes, you can, as long as your fund has been invested for a little more than 90 days.

If you the amount back within 15 days, it’s tax-free.

You can use a maximum of $20,000.

If you are married or have a common-law partner, you can open a spousal RRSP account.

You can contribute up to 18% of your annual income or $ 26,230 (the lower amount, change every year)

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