Financial Fitness – February 2019

Planning ahead for your retirement can be complicated, the benefits of making maximum contributions to your Registered Retirement Sings Plan (RRSP) are straight-forward.

First, enjoying the immediate benefit of a tax deduction, which often results in a nice tax refund, is a clear reason to contribute. The median Canadian making their maximum RRSP contribution will receive a deduction worth $3,570. Adding to this, the affect of the tax-free, compound growth on your investments makes a huge difference on long-term savings. What if you can’t come up with the money to contribute or you’re saving for something? Well in that case, there are a couple of strategies that can be used to get your savings started.

Borrowing to save – Have you considered taking a loan to boost your contribution? Not only can you get a jump start on saving, but you can use the potential refund to pay off some of the loan. This is a great strategy for those who are in a higher tax bracket, but cash is tight near the RRSP deadline.

Regularly scheduled contributions – Why wait until the deadline? Start a regular contribution so that you can spread out the pain of putting that money away for the future. All those smaller contributions can still add up to a nice refund at tax time.

Spousal contributions – If you are expecting to earn more in retirement than your spouse, you should consider making spousal RRSP contributions. These contributions use your deduction room but when they are accessed at a later date, they are attributed to your spouse as income. This can be a smart strategy to lower your overall tax bill.

Multiply your savings – If you are a first-time homebuyer or are looking to go back to school, you should look at utilizing the power of your RRSP. A first-time homebuyer, for example, can withdraw $25,000 from their RRSP to buy a qualifying home. This means that by contributing $25,000 to your RRSP, you would not only have this ready for your down payment, but you would likely have also received total refunds of $7,050. Wouldn’t that be nice for closing costs and moving expenses!

Talk to your advisor, the deadline is March 1st!

*The 2015 median Canadian income was used in calculating the figures contained in this article. All statistics were provided by StatsCanada.

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This information has been prepared by Carol Plaisier Investment Advisor for HollisWealth®, a division of Industrial Alliance Securities Inc. and does not necessarily reflect the opinion of HollisWealth®. The information contained in this website comes from sources we believe to be reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces where she is registered. For more information about HollisWealth®, please consult the official website at

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