[LiquidTurbo]

Hi,

Need advise on RRSPs, strategy, how much to contribute, how they work, etc. Correct me if I'm wrong but there's probably a bunch of people who don't know a lot about RRSPs.

Any help?

[F30]

In short, it is a good thing, maximize your RRSP if you have the funds to do it. Also maximize your TFSA

RRSPs allow you to contribute now towards funding your retirement. Contributing to an RRSP has two main benefits: first, your contribution is tax deductible and second, your contributions grow tax sheltered inside your RRSP and as a result, they have the potential to grow at a much faster rate than funds saved outside an RRSP.

Long version (with all kinds of goodies):

Registered Retirement Savings Plan (RRSP) (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html)

http://www.rbcroyalbank.com/products/rrsp/index.html

[waddy41]

Yes I'm very surprised to find that a lot of people have no idea about what rrsp's are and some of the basic rules..

Before deciding to contribute and how much to contribute, thoroughly learn the rules, work out the math/tax savings and plan far out into the future..

[adrnlnrush00]

To truly determine if an RRSP is worth your while, you really need to do some tax planning.

The purpose of an RRSP is to defer taxes that would have been payable now to future years when you're in retirement and drawing from your retirement fund. In order to truly benefit from an RRSP, your taxable income today must be higher than what you anticipate to be your taxable income when you retire. If it isn't that you may ultimately pay more taxes over your lifetime had you not contributed to your RRSP.

On a related note, an RRSP is yet just another savings vehicle. It should only be a part of your overall portfolio of savings vehicles... not the only savings vehicle.

[Selanne_200]

A simple strategy I can offer is to buy RRSP and use the refund you get to buy in a TFSA account, therefore you can maximize your retirement planning.

[waddy41]

Also remember that when you withdraw from an RRSP (if not for 1st time home buying or schooling), you will lose the contribution room FOREVER

I forgot that rule last yr and learned the hard way..it feels like my money is locked in there for LIFE

[taylor192]

Hi,

Need advise on RRSPs, strategy, how much to contribute, how they work, etc. Correct me if I'm wrong but there's probably a bunch of people who don't know a lot about RRSPs.

Any help?
The advice is different for each situation, you need to provide more info of where you're at and where you want to be.

Here's some general guidelines:

If you have a defined benefit pension plan (like most government employees) then RRSPs are probably not for you. Use your TFSA.

If you make less than $50K, then TFSA is probably a better bet. If you search for TFSA vs RRSP you'll find lots of material showing how at lower incomes the tax return now doesn't help as much as no tax on withdrawal.

If you make more than $50K, then RRSP.

---

As for how much to contribute, you'll need to decide when you want to retire, how much savings you have now, and how much you want to retire on. I want to retire 50% of my salary, and I know CPP/OAS will provide ~30% of that. So I need to save enough to provide 35% of my salary starting at 65yo.

There are different ways to reach that target. I could have saved a percentage of my salary each year for the rest of my life. Instead I decided that trying to save while having a family would be difficult, so I wanted to have enough in my RRSP by age 30 and set a goal when I was 25yo. I'm 33yo now and have surpassed my goal, yet recently lowered my expectations of growth from 7% to 6% cause the markets suck, so I've been maxing out my RRSP and have set a new goal.

So... back to my first question: where are you at and where do you want to be?

PM me if you have more questions, as I often forget to check this forum.

[Tapioca]

It's hard to not get sucked into the hype around RRSPs. I had a meeting with my mortgage manager over the weekend and she chatised me for not contributing to my RRSP. Then I told her that I have a defined benefit pension and she later backpedalled and said that RRSPs aren't for everyone. Her ex-husband is a public servant and she flat out stated that his pension is worth a million bucks (of course, she's entitled to half of that.)

It pains me to say this, but I think I'm going to pay taxes this year instead of contributing to my RRSP. At my income level, I would have to pay nearly 5 grand to off-set any taxes that I owe. I want to preserve my emergency fund and if I were to make an RRSP contribution this year, I would have to put a serious dent into that fund. Some food for thought for others who may be in my situation (or who spent beyond their means this year.)

[4444]

RRSP's are an interesting fella, and everyone will have their opinion on them.

Do you need the money? If not, and your TFSA is maxed out, then by all means, use the vehicle to get a tax refund - the value of that money today, combined with your RRSP could be important to you (time value of money too)

Some say to put money into RRSP, and use the tax refund to fund TFSA.

If you need that money now and you're earning more and more money, then I'd say don't contribute as you'll be getting larger refunds later on (in next 3, 5, 10 years) - its not like you lose the contribution room, and once its in, its in, it becomes quite expensive money to retrieve (other than through a tax deferred plan, like the first time homebuyers thingee) as you have to pay marginal tax on it (especially important if you are increasing your earnings).

Also consider the fact that tax rates will likely rise overtime given the fact that we, as the western world are just effectively 'kicking the can down the road' - someone has to pay for all of our parents when they retire and all the doucebags who get government defined benefit plans (YES, i said that right, government workers getting DB plans are d-b's as we have to pay for them, if you get a DB from a public company, good for you

Another option is to reinvest your tax refund (more RRSP or TFSA as mentioned) and enjoy the power of compounding returns (reinvested dividends, reinvested capital gains) - HOWEVER, you should watch what you have in these accounts, capital gains are taxed favouribly (1/2 of the gain), dividends attract the dividend tax credit (favourable to be taxed), REIT distributions are taxed at the highest marginal rate so they are good RRSP candidates.

Not all earnings are alike - so that is a MUST for consideration once you figure out what you want to invest in and your time frame.

RRSP contribution is a totally personal choice - 10 people with identical earnings will end up with 10 different decisions for a reason

[mr_chin]

What's the difference between keeping money in a savings account and a TFSA? You don't have to report the interest earned in the savings account anyways, right?\

It's hard to not get sucked into the hype around RRSPs. I had a meeting with my mortgage manager over the weekend and she chatised me for not contributing to my RRSP. Then I told her that I have a defined benefit pension and she later backpedalled and said that RRSPs aren't for everyone. Her ex-husband is a public servant and she flat out stated that his pension is worth a million bucks (of course, she's entitled to half of that.)

It pains me to say this, but I think I'm going to pay taxes this year instead of contributing to my RRSP. At my income level, I would have to pay nearly 5 grand to off-set any taxes that I owe. I want to preserve my emergency fund and if I were to make an RRSP contribution this year, I would have to put a serious dent into that fund. Some food for thought for others who may be in my situation (or who spent beyond their means this year.)

IMO you should buy enough RRSP to not pay tax. Once you pay tax to the government, the money is gone and can never be retreived again. At least once you have your money in your RRSP, you can withdraw if there ever is an emergency. If not, then let it sit.

To me, RRSP saves us from giving money to the government and it's stupid not to contribute if you owe tax this april.

[F30]

Wrong. LOL, out of curiosity, what made you think that? Or is my e-sarcasm meter broken?
Posted via RS Mobile (http://www.revscene.net/forums/announcement.php?a=228)

[Tapioca]

What's the difference between keeping money in a savings account and a TFSA? You don't have to report the interest earned in the savings account anyways, right?\



IMO you should buy enough RRSP to not pay tax. Once you pay tax to the government, the money is gone and can never be retreived again. At least once you have your money in your RRSP, you can withdraw if there ever is an emergency. If not, then let it sit.

To me, RRSP saves us from giving money to the government and it's stupid not to contribute if you owe tax this april.

If I had an emergency, I would still be taxed if I took the RRSP out (unless I lost my job and wouldn't be expected to work for over a year.) RRSP are tax deferrals, not tax avoidance instruments.

I prefer to have a liquid emergency fund. Sure, I have home equity, but I'm not comfortable tapping into that.

[mr_chin]

If I had an emergency, I would still be taxed if I took the RRSP out (unless I lost my job and wouldn't be expected to work for over a year.) RRSP are tax deferrals, not tax avoidance instruments.

I prefer to have a liquid emergency fund. Sure, I have home equity, but I'm not comfortable tapping into that.

Don't get me wrong, I'm not expert in RRSP, just started learning it myself.

But isn't the tax you pay from taking out an RRSP the same as if you are paying it now?

So for example, if you owe $4000 on your income tax. If you buy say $12000 to defer it. Later in that same year, if you take it out, you get taxed $4000 right?]

No sarcasm or anything, just purely trying to learn RRSP myself.

PS - My TFSA question has been answered in the mail today. Received a T5 for all the interest I've earned in my high interest savings account. :okay:

[SumAznGuy]

IMO you should buy enough RRSP to not pay tax. Once you pay tax to the government, the money is gone and can never be retreived again. At least once you have your money in your RRSP, you can withdraw if there ever is an emergency. If not, then let it sit.

To me, RRSP saves us from giving money to the government and it's stupid not to contribute if you owe tax this april.

Don't get me wrong, I'm not expert in RRSP, just started learning it myself.

But isn't the tax you pay from taking out an RRSP the same as if you are paying it now?

So for example, if you owe $4000 on your income tax. If you buy say $12000 to defer it. Later in that same year, if you take it out, you get taxed $4000 right?]

No sarcasm or anything, just purely trying to learn RRSP myself.

Please don't be giving out RRSP advice if you have no clue how it works.

First off, even if you do not use up all your RRSP room, whatever is left over is carried over to the following year, so NO, your tax money is not GONE FOREVER.

Say you have $42,000 of taxible income this year.

2012 Income Tax Rates Canada | Tax Brackets 2012 | Canadian Income Tax Calculator | Canada Tax Information (http://www.tax-services.ca/income-tax-rates-canada-tax-brackets-2012/)

You would be in the lowest tax bracket, 15%.

Sure, you could use up all your eligible RRSP room this year and save 15% on that amount, or save it for a year you make more money.

And on your question about taxing your money if you take out your RRSP's, well that amount that you take out get's added to your income from that year. Say you need to take out the $12K in RRSP's. And you made $60K that year. Well, your taxible income is now $72K. Tax amount taken in tax could be equal to, greater than, or less than what you got back when you first invested the $12K in RRSP's depending on what your tax rate was at the time of the purchase.

RRSP's are meant for long term, and is tax deferral not advoidance.

In a perfect world, when you are 65 and retired, your income should be a lot less than what it is now and that is when you would pull your money out of RRSP's because at the end of the year, your taxible income should be a lot less.

And remember, the more money you have in RRSP's, the less money you get from the government.

[Szeto]

RRSP versus TFSA: Head to Head Comparison

LINK (http://youngandthrifty.ca/rrsps/rrsp-versus-tfsa-head-to-head-comparison/)

Give it a read and you should know what you need.

[mr_chin]

It's that time of the year again, and I'm battling if I should contribute this year. I haven't contributed any throughout the year.

Will I benefit much if my contribution doesn't bring me to a lower tax bracket? Well, obviously there is a little benefit of some sort, but I mean in a strategic sense.

[phrozen3]

Sorry for being such a noob, but I was wondering how do I go about purchasing RRSP's? My brother says that I can transfer funds on a monthly basis using a Daily Interest Savings RRSP? Is this correct?

Thanks in advance for any help you guys can provide.

[Szeto]

best bet is to call your bank first and book an appointment with the advisor and they can provide in-depth answers. As taylor has mentioned, RRSP tend to benefit those who are making a higher income.

ETF is another good direction to look into in terms of investing/saving or so I was told.

[duc_evo_sp]

Here's a good piece of advice..... DON"T DO IT!"

[twdm]

It's that time of the year again, and I'm battling if I should contribute this year. I haven't contributed any throughout the year.

Will I benefit much if my contribution doesn't bring me to a lower tax bracket? Well, obviously there is a little benefit of some sort, but I mean in a strategic sense.

You need to understand how the Canadian tax system works. I hate it when people say you should contribute to your RRSP to bring down your tax bracket. It doesn't work like that. Our taxes are layered. So let's say you get taxed 30% on your income at your income bracket, you get $0.30 back for every dollar you contribute. When you go into the next bracket which taxes 26%, you get $0.26 for every dollar you contribute within that bracket.

So no matter how far you are from the next bracket, you are lowering your average tax rate by reducing the amount of income taxed at your highest bracket.

[LiquidTurbo]

Here's a good piece of advice..... DON"T DO IT!"

Explain?

[bobbinka]

it is ALWAYS a good thing to purchase RRSPs and TFSA provided you have the means to do so. if you have the contribution room for RRSPs and the funds to do so, it is beneficial to maximize your contributions to simply increase your savings. afterall, that is what the purpose of an RRSP is, for your savings.

You dont need to use the contributions as a deduction on your taxes in that immediate year if you choose not to (for example, if you foresee an increase in income in future years). you should always make contributions when you can, so that you have the option to choose when to use it as a deduction in the future.


So no matter how far you are from the next bracket, you are lowering your average tax rate by reducing the amount of income taxed at your highest bracket.

true, but it still stands that it is more beneficial for you use your RRSPs as a deduction for every dollar over the first tax bracket first. if i make $45,000 and had $5000 in RRSP contributions, i could simply just use $3000 of my contributions as a deduction so that i can avoid paying tax for the portion of income in the 2nd tax bracket (roughly 42k) of 22%, and then save the other $2000 as an unused contribution amount for future years where i may get a raise and be further in the 2nd tax bracket, instead of using the $2000 now to save 15%

[mr_chin]

Reviving old thread.

Would it be wise to take out a big loan on low interest to maximize my contribution and then pay off the loan as fast as possible?

[sdubfid]

Another option is to reinvest your tax refund (more RRSP or TFSA as mentioned) and enjoy the power of compounding returns (reinvested dividends, reinvested capital gains) - HOWEVER, you should watch what you have in these accounts, capital gains are taxed favouribly (1/2 of the gain), dividends attract the dividend tax credit (favourable to be taxed), REIT distributions are taxed at the highest marginal rate so they are good RRSP candidates.


I thought none of those matter in an rrsp account as the tax is triggered on the lump sum that you remove?

I know that US dividends in TFSA have withholding taxes compared to RRSP.

[SumAznGuy]

Reviving old thread.

Would it be wise to take out a big loan on low interest to maximize my contribution and then pay off the loan as fast as possible?

All depends on how much you plan on borrowing and at what interest rate.
Every person is going to be different but generally speaking, you get back $0.30 on the dollar that you put into RRSP's.
So if you borrow $5K to buy RRSP's, expect a tax return around $1500.
So now you owe $3500 at whatever interest rate you borrow at.

My own personal belief is that if you have to borrow money to buy RRSP's, then you shouldn't do it.

You are taking on debt to put money away into something that is pretty locked in or has high cost to withdraw from.

Like we have all said, you will not lose the contribution room so why borrow for the same of defering taxes. Save the room till you make more money.

[IMASA]

I make around 2x more than my wife and have been contributing regularly to my RRSP's.
At what point should I consider spousal RRSP instead of depositing to my own account?
I will have a higher pension than her when we retire, so would it be more beneficial to do spousal RRSP's now?

[mr_chin]

All depends on how much you plan on borrowing and at what interest rate.
Every person is going to be different but generally speaking, you get back $0.30 on the dollar that you put into RRSP's.
So if you borrow $5K to buy RRSP's, expect a tax return around $1500.
So now you owe $3500 at whatever interest rate you borrow at.

My own personal belief is that if you have to borrow money to buy RRSP's, then you shouldn't do it.

You are taking on debt to put money away into something that is pretty locked in or has high cost to withdraw from.

Like we have all said, you will not lose the contribution room so why borrow for the same of defering taxes. Save the room till you make more money.

Each year where you don't contribute, you are literally giving money to the government.

Each year that you missed, you cannot get back that year's tax paid, even if you decide to contribute to the maximum several years later.

Isn't that how it works?

[SumAznGuy]

Each year where you don't contribute, you are literally giving money to the government.

Each year that you missed, you cannot get back that year's tax paid, even if you decide to contribute to the maximum several years later.

Isn't that how it works?

No, not really.

Either way, taxes will be paid to the government.
Say this year you make 50K. Well, you pay taxes on that $50K at whatever this year's tax rates are.
Say you put in $5K of RRSPs, then you will be taxed on $45K.

Say you quit your job for a year and have 0 income that tax year. You withdraw $40K from RRSP's, well you will be taxed on $40K.


So say you are at the lowest tax bracket. Don't buy RRSP's and save the room for future years where you are making more $$$ and will be taxes at higher tax brackets.


RRSP's is a way to defer taxes, not as a way to get around paying taxes.

There are only 2 guarantees in life. Death and taxes.

[SumAznGuy]

Canadian income tax rates for individuals - current and previous years (http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html)

For 2016, the first tax bracket is 15% on the first $45,282.
The second tax bracket is from $45,282 to $90,563 and is 20.5%
The third bracket is $90,563 to $140,388 and is at 26%.
The fourth bracket is from $140,388 to $200K at 29%
The last bracket is $200K+ and is at 33%.

Say you have $5K of RRSP room this year and you make less than $45,282.
If you save that $5K of room to next year and next year you make $90K.
Well, 90,000-45282=44718 of that income is taxed at 20.5%

So is your $5K of RRSP better spent deferring taxes at 15% or at 20.5%?

Going back to your borrowing money question.
Say you borrow at 2.5% but you are deferring taxes from 15% and may end up paying taxes at 15% in the future, then you are paying 2.5% to the banks.
Worse case scenario. You are laidoff and have to with draw from your RRSP's. Say that year your income is $60K.
Well, the deferred taxes from 15% end up being taxed at 20.5% so you end up giving an extra 5.5% of that portion in the second bracket to the government plus the 2.5% that was changed in interest.

[JSALES]

Thought I'd post my question here

I have an RRSP and TFSA that I contribute to biweekly but I also have a high interest savings account, should I just cancel my high interest account since I have a TFSA?

[JDMDreams]

yes unless you really need the cash any time soon. Tfsa remember that you have a contribution and withdraw limit. but a tfsa allows you to put money in much higher return investments all tax free

[swiftshift]

1. What is the last date that an individual can contribute to an RRSP for the 2015 taxation year?
February 29th, 2016.

2. What is an Individual’s Maximum contribution limit for the 2015 taxation year?
$24,930

3. If an individual wants to withdraw funds in cash from a RRSP what are the withholding tax rates?
Up to $5000 – 10%
Between $5000-$15000 – 20%
More than $15000 – 30%

4. Assuming an individual has money in RRSP’s when can they start withdrawing for retirement income from these savings?
Anytime before 71,

5. What is the differences between a spousal RRSP contribution and non-spousal RRSP contribution?
- A spousal RRSP is where one spouse makes an RRSP contribution but the other spouse owns the plan
- In a spousal RRSP, the higher income spouse will contribute to the plan. The higher income spouse can then claim the tax deduction.

7. How can figure out your RRSP deduction limit for 2015?
Notice of Assessment –

8. If a person wants to over contribute, how much is the lifetime penalty-free RRSP over contribution limit?
If you over contribute, you will be subject to a 1% penalty tax per month

9. What is a homebuyer’s plan?
If you are a first time home buyer, it is possible to withdraw up to $25000 from your RRSP under the Home Buyer's Plan when you buy a qualifying home

10. What is the maximum withdrawal through the home Buyers’ plan?
$25000

11. What is LLLP stand for?
Lifelong Learning Plan

12. Who will qualify for LLLP?
A person who owns an RRSP Plan and Resident of Canada
The student is enrolled or has received an offer to enroll before March of the following year

[xxxrsxxx]

i have a question about this.
2. What is an Individual’s Maximum contribution limit for the 2015 taxation year?
$24,930

So even if my contribution room is more than $24,930, the max I can put is $24,930?
What if i go over?

[SumAznGuy]

i have a question about this.
2. What is an Individual’s Maximum contribution limit for the 2015 taxation year?
$24,930

So even if my contribution room is more than $24,930, the max I can put is $24,930?
What if i go over?

IIRC, anything extra over $24,930 can't be used against your income for the year.
But, you can contribute and claim more than that amount if you still have room from previous years.
IE you have $10K of room from 2014 and $10K from 2013, you can buy up to and claim $44930 against your income this year.

[johnnyblaze]

if ur on the lower tier of the tax bracket just buy some GICs

[DragonChi]

If I claim the first time home buyers with my rrsp, can I get a tax dedication the second time I buy rrsp's?

[IMASA]

If I claim the first time home buyers with my rrsp, can I get a tax dedication the second time I but rrsp's?

You can still get a tax deductions when buying RRSP's, but you have to make a payment back towards what you borrowed from your RRSP towards the HBP. There is a min payment amount. Whatever that is left over is what they use to calculate your tax deduction.

What is the Home Buyers' Plan? (http://www.cra-arc.gc.ca/hbp/)

[DragonChi]

The example in that link wasn't clear whether the repayments were tax deductible. From what I read they're at least partially deductible.

[SumAznGuy]

The example in that link wasn't clear whether the repayments were tax deductible. From what I read they're at least partially deductible.

RRSP repayments are not tax deductable. The government will never allow you to double dip.
If you make a repayment and don't fill out the proper forms, the government will view the repayment as new RRSP purchases, and you will get the tax deductions for it.
But, that portion of RRSP that was used as first time home buyers will go towards your taxable income and you will lose that part of RRSP room, if that makes any sense.

https://turbotax.intuit.ca/tax-resources/home-owner-tax/repaying-a-home-buyer-plan.jsp

[DragonChi]

That's the answer I expected. So without filling out the proper forms and expecting double diping, there could be a chance of over contribution.

I'm suprised to hear that using first time home buyers counts as taxable income though.

[SumAznGuy]

I'm suprised to hear that using first time home buyers counts as taxable income though.

When you buy RRSP's, all you are doing is defering that portion of income to be taxed at a later date, and hopefully at a lower tax bracket.
When you take out, max $25K, as a first time home buyer, you have to pay it all back within 15 years.
If you miss a repayment, then they treat it as a withdrawl from RRSP's and you will be taxed on it, just like you would if you needed money and withdrew from your RRSP's.

Sorry, I re-read what I wrote and see what you are confused on.
What I meant by taxable income is, when you withdraw from your RRSP's, that amount is added to your taxable income.
Say you made $40K and needed to withdraw $20K from RRSP's. For that tax year, you will be taxed on $60K.

[Verdasco]

No, not really.

Either way, taxes will be paid to the government.
Say this year you make 50K. Well, you pay taxes on that $50K at whatever this year's tax rates are.
Say you put in $5K of RRSPs, then you will be taxed on $45K.

Say you quit your job for a year and have 0 income that tax year. You withdraw $40K from RRSP's, well you will be taxed on $40K.


So say you are at the lowest tax bracket. Don't buy RRSP's and save the room for future years where you are making more $$$ and will be taxes at higher tax brackets.


RRSP's is a way to defer taxes, not as a way to get around paying taxes.

There are only 2 guarantees in life. Death and taxes.

most legit post in this thread, wp

[mr_chin]

When you buy RRSP's, all you are doing is defering that portion of income to be taxed at a later date, and hopefully at a lower tax bracket.
When you take out, max $25K, as a first time home buyer, you have to pay it all back within 15 years.
If you miss a repayment, then they treat it as a withdrawl from RRSP's and you will be taxed on it, just like you would if you needed money and withdrew from your RRSP's.

Sorry, I re-read what I wrote and see what you are confused on.
What I meant by taxable income is, when you withdraw from your RRSP's, that amount is added to your taxable income.
Say you made $40K and needed to withdraw $20K from RRSP's. For that tax year, you will be taxed on $60K.

I remember seeing somewhere that if you make less than $7,9xx a year, you don't get taxed. Did they changed that?

[lowside67]

There is a scary amount of misinformation in this thread. RRSPs and TFSAs are powerful tools for minimizing your tax paid over the long run but particularly RRSPs require some strong planning as they are not particularly flexible and can be expensive to withdraw if you need them in an emergency. A financial planner at your bank or financial institution will review your plan and help you understand what you need for free or at a minimal cost and it's worth doing.

Simple things like when you get your first job out of university, it's tempting to start contributing to your RRSP right away to get a tax refund. However, in some fields, you are going to have a huge increase in pay over a few years, and in most of those cases, it makes sense to wait because your marginal tax rates will increase so quickly. Simply put, if you put $20,000 in RRSPs away right out of university, your tax rate might only be 30% so you get $6,000 back while if you wait a few years, it might be 40% and you'd get $8,000 back. Just an example, not actual advice to any one person's situation, but the point is having qualified help is worthwhile.

Mark (works at a bank but is not a financial planner)

[bobbinka]

I remember seeing somewhere that if you make less than $7,9xx a year, you don't get taxed. Did they changed that?

Basic personal tax credit is about 10 or 11 thousand, so if you make less than that, then you'll get back all your tax deductions (on the federal side of the tax return, the provincial side has a different amount). The number changes year to year, it was probably 9000 years ago

[Tapioca]

There is a scary amount of misinformation in this thread. RRSPs and TFSAs are powerful tools for minimizing your tax paid over the long run but particularly RRSPs require some strong planning as they are not particularly flexible and can be expensive to withdraw if you need them in an emergency. A financial planner at your bank or financial institution will review your plan and help you understand what you need for free or at a minimal cost and it's worth doing.


The TFSA is such a powerful investment vehicle that the federal government had to reduce the limit because of the potential lost revenue.

Generally, if you're young, you want to save using your TFSA. Max out your TFSA each year, and use your RRSP room strategically. If you have a pension, it makes no sense to contribute to an RRSP before your max out your TFSA until you leave your company/organization offering that pension.