RRSPs – The time is now.
It is almost the middle of February and while most have their minds turned to Cupid’s arrow, at this time of year I get to thinking about my very special relationship with… Canada Revenue Agency. Yes, it’s time for me to start fretting about my taxes! The deadline to file your personal taxes is April 30, but the time for action is now as far as RRSPs (Registered Retirement Savings Plan) contributions are concerned. The deadline to contribute and account for these contributions on your 2016 return is March 1, 2017 – just a couple of short weeks away.
RRSPs are they for me?
I’m banking on the brilliance of my children to carry me through a comfortable retirement, but since I still have to remind them to brush their teeth on a daily basis, it’s probably wise to have a back-up plan. For me that’s a well-funded RRSP, but there a few other good reasons to contribute too…
- Tax savings – Contributions can be claimed as a deduction on your return while you save, reducing the amount of tax you pay. This amount varies depending on your tax bracket and how much you contribute each year, but if you work with your financial planner early on, they can help you determine what the contributions need to be to help you avoid paying too much in tax, and possibly even find you a refund.
- Earnings on RRSPs are tax free – Yes it’s true, as long as the money you invest stays in an RRSP you won’t pay any taxes on interest earned, allowing you to grow your savings even faster.
- You may borrow from your RRSP to grow – You may borrow from your RRSP without any tax implications for two reasons, as a first time homebuyer or to fund your education. Canada Revenue Agency allows qualifying participants to withdraw cash from their investment to facilitate either of these endeavours with a reasonable repayment period and no interest or penalty to do so. Find more information here on the Home Buyers Plan (HBP) and the Lifelong Learning Plan (LLP).
Who should have an RRSP?
It’s true there are plenty of good reasons to have a registered retirement savings plan, but it might not be the right solution for everyone. For instance, if you foresee needing to withdraw those funds outside the parameters of the HBP or LLP before your retirement, there are other tax sheltered savings programs to consider. Your annual income, current investment portfolio, age, and savings goals are just a few of the things to factor into your planning.
Ask for help figuring out what your map to retirement savings should look like to facilitate the kind of lifestyle you’d like to have later in life. A good financial planner stays on top of current opportunities and understands the rules and ever-changing financial landscape that can affect your future. Send me a note and I can connect you with just the right person for the task.
Want to know more? Review these sources and resources.
Have More Questions?
Let me know and I’ll do my best to address it here for you and all of our readers. Better yet, contact an InsureMy advisor; these guys know their stuff. Email Info@InsureMy.ca or give them a call locally at (403) 410-1896 or toll free at 1-844-410-1896.
Everyday Insurance With Allie
Working mom, lover of the great outdoors and self-professed know-it-all. Our resident blogger, Allie isn’t the insurance guru she claims to be – but she’s learning and we are happy to help guide her. All the while keeping you in the loop on the “insurancey” stuff you need to know. #AskAllie