The Canada Revenue Agency, CRA, allows the Canadian residents to contribute to their retirement savings and enjoy tax benefits on the total contribution.
The Registered Retirement Savings Plan (RRSP) is a government-regulated investment plan, designed to help salaried professionals to maximize their retirement savings while reducing the taxes, and any income that is earned on the investments.
It is one of the best ways to save money for retirement so you always stress-free about the regular income, even when you are not working or earning. The Registered Retirement Savings Plan can hold a variety of assets, including GICs, mutual funds, bonds, stocks, and cash.
The money that the contributors put to the RRSP account will reduce the taxable income. As a contributor, you need not to pay on your RRSP contribution or any gains you earn until you withdraw funds.
Savings on Taxable Income – The contributors are facilitated to save on their annual income as the contribution is not considered as the taxable income, allowing the account holders to save more with immediate tax savings.
Maximum Contribution – The contribution limit of RRSP is not like other saving plans as you can save up to 18% of income you earn or a fixed ceiling if your income is high.
Build Wealth Faster – With a regular contribution to your RRSP account, you take advantage of the power of compound interest. With an option to save on the taxes on the income, your investment grows even more quickly.
Build on Home or Pay or Education– Contributors are also eligible to take advantage of ‘Home Buyer’s Plan’ or ‘Lifelong Learning Plan’ as these programs allow the RRSP account holders to withdraw $25,000 and $10,000 respectively form their RRSP in a calendar year.
Regular Contribution – You can choose to pay any lump-sum amount for the Registered Retirement Savings Plan savings account. The investment will grow faster with a regular contributor as you won’t have to worry about meeting RRSP deadlines.
Savings for Spouse – If you wish to save on your spouse’s behalf, you can contribute to his or her RRSP savings without paying tax on your contribution.
In addition to using the RRSP as a tool to enjoy saving on your taxable income and save for the future, RRSPs may also be used as a “safety net” for unexpected financial emergencies. However, the early withdrawals will be taxed and counted towards your taxable income for the fiscal year.
Allkind Insurance team is dedicated to helping the Canada citizens stay prepared for the life after work with financial freedom by ensuring that you are leveraging all the tools available to optimize your savings for the retirement. We offer best, expert advice for RRSP saving with world-class service every time you deal with our retirement planning specialists. We know retirement is difficult, so we make sure to help you stay prepared with the best saving methods while reducing the taxes on regular income.