Here’s what you should know about retirement!
What is a Retirement Savings Plan (RRSP)? An RRSP is government-registered plan that lets you defer your income tax until after you retire. Your contributions are invested and earn interest until you cash them in for retirement or other projects.
Perfect if you are looking to:
- Invest in a tax-sheltered vehicle
- Reduce your taxable income
- Save for retirement
- Buy a home
- Finance your education
Things you should know:
| Deadline | Age Limit | Maximum contribution |
|---|---|---|
| Contributions made in the first 60 days of the year (by March 1st) can be claimed against the previous year's income. | Contributions can be made until December 31 of the year they turn 71. | 18% of the previous year’s income. Unused contribution room can be carried forward. |
Five tips to help them save
1. Review your goals on a regular basis
Your dreams and interests will change over time. Re-evaluate your needs once a year and make sure that the amount you're saving for retirement will allow you to meet your goals. Meet with an advisor if your plan needs tweaking, he will help you figure out how much to save for the retirement you want.
2. Set up systematic savings
Rather than contributing to your RRSP or TFSA at the end of the year, you can make smaller contributions regularly throughout the year. A good way to do this is through systematic savings: automatic withdrawals debited to your bank account. Simple and smart!
3. Consult a specialist
At this stage of life, you want to make smart investments as you prepare for retirement. Not sure how to get there? Meet with a financial advisor who can help you fine-tune your retirement plan. An advisor can help you identify the best financial approach for your situation—and your dreams!
4. Manage your finances effectively
Adopting good spending habits, keeping your debt down and using your credit card wisely are just some examples of sound financial management.
5. Treat yourself and enjoy life
Preparing for retirement takes some work, but you don't need to sacrifice today to live well tomorrow. Your advisor can help you figure out how you want to live after retirement and make the right decisions to get you there.