What is an RRSP?

Simply put, a Registered Retirement Savings Plan, or RRSP, is a type of savings account that helps Canadians save for their retirement.

How does an RRSP work?

You can hold a variety of investments in your RRSP, like:

Any contributions into your RRSP, and any growth within your RRSP, help you defer taxable income. This means you won’t have to pay taxes on your contributions or any investment growth until you withdraw funds. For most, withdrawing from your RRSP at a later point in life – in your 60s or 70s – means paying much less tax.

Think of it this way: you’ll probably be in a much lower tax bracket when you’re retired in your 60s or 70s. So you’ll be paying less tax when you withdraw from your RRSP at that age.

What’s your RRSP contribution limit?

Your yearly contribution limit is a percentage of your earned income plus unused room from earlier years. Any money put into an RRSP, up to the limit, reduces your taxable income for that year.

Your RRSP contribution limit is calculated each year and will appear on the Notice of Assessment you receive from the Canada Revenue Agency (CRA) after filing your taxes.

Need help getting started?

An advisor can help you build a savings plan that meets your goals and needs. Most advisors now offer to meet Clients virtually by video chat. Find an advisor today.

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