The Government Can Help Pay For Your Retirement

The Government Can Help Pay For Your Retirement

How would you like your money to make more money?

Do you have an existing RRSP?

Here is an opportunity – take your tax refund and reinvest it back into your RRSP!

Two things happen when you take such action:

#1) You are using the power of compound interest to even greater advantage. Since RRSP’s are tax deferred*, taxation does not erode interest while growing inside an RRSP. Having a bigger contribution means more money in the RRSP product. More money in the RRSP product means more interest!

#2) You are contributing to an even larger tax credit on your tax return because you are contributing a greater amount to your RRSP therefore reducing your taxable income by the amount your contributed to your RRSP. This does not mean you are getting a tax credit dollar for dollar, the credit is based on your tax bracket. For instance (an for simplicity’s sake), if you are in the 15% tax bracket and you contribute $1,000 to your RRSP, you will receive a tax credit of $150.

Even if you are a regular contributor (making minimum a monthly contribution to your RRSP; some do it every paycheque) to your RRSP like I am, you can, at any time, make an additional contribution, granted you are not maximizing your RRSP space year in and year out. Using your refund is an excellent way to add to your retirement fund without affecting your budget.

It is time to take advantage of opportunities that present themselves.

*tax deferred pertaining to RRSP’s means taxation from the product doesn’t happen until it is converted to a Registered Retirement Income Fund (RRIF) or an annuity and therefore declared as income and taxed after age 71.

Leave a Reply