Don’t wait for the RRSP deadline to save
Waiting for the deadline to contribute to an RRSP? There's an easier, stress-free way to save for retirement.
Does this sound like you? February rolls around and you’re caught off guard by the looming RRSP contribution deadline. You’re smart to save for your retirement – but there’s a smarter way to do it. Contribute to your RRSP regularly throughout the year. Why? Because this way:
- You'll reap the benefits of growth over a longer period
- You won't have to make hasty investment choices, and
With automatic deductions from your bank account or paycheque, you won't even have to think about it.
What’s the deadline to contribute to an RRSP?
March 2, 2026 is the deadline to contribute to your RRSP for the 2025 tax year. It's best if you don't wait until that day to contribute. Here’s why.
Why avoid last-minute RRSP contributions?
Let’s imagine Alex is a typical Canadian saving for his retirement. He knows that an RRSP allows his money to grow tax-deferred until he needs it. He also knows the RRSP contribution deadline is right around the corner and he's rushing to make his yearly investment.
His Sun Life advisor, Sarah, is glad to see him make RRSP contributions, but has an idea to make contributing to his RRSP easier, while potentially, creating greater returns.
What are the benefits of making regular RRSP contributions?
Sarah suggests rather than a making a large contribution at the deadline, Alex should consider making smaller, regular contributions throughout the year. The amount contributed each year doesn’t change, but the timing of it does. To do this, pre-authorized contributions (PACs) will be made twice per month (on every pay day). This could, potentially, benefit Alex in several ways.
1. It takes the guesswork (and discipline) out of saving
Signing up for a PAC can take the contribution decision right out of his saving equation. It also increases the likelihood of investing regularly.
2. He benefits from the income tax deduction on his RRSP contributions faster
By providing his employer with a letter of authority from a Canada Revenue Agency (CRA) office, income taxes deducted on his pay can be reduced. To get this letter, he must complete CRA form T1213 Request to Reduce Tax Deductions at Source, and provide documents to support the request for the tax deduction.
Whether he invests $500 per month or $6,000 all at once at the RRSP deadline, he’s still contributing the same amount and will get the same tax refund. He’ll just get the benefit of it faster by making regular contributions throughout the year.
3. His savings can, potentially, grow faster.
By accelerating contributions, they have a longer time to increase in value.
4. He can, potentially, benefit from dollar-cost averaging.
Dollar-cost averaging involves investing equal amounts of money at regular intervals regardless of a security’s price. It can help reduce the risk of market volatility by spreading purchases over time. It can also help guard against emotional investing by maintaining consistency.
In short, regular monthly RRSP contributions can help avoid the stress of RRSP deadline contributions. And it can potentially make it easier for Alex to see his RRSP grow faster.
This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.
