Start small and watch your savings grow. Consider investing a monthly sum. Even $50 a month (less than $2 a day) can make a big difference over time. Plus, watch your savings grow faster with the power of compound interest – earn interest not only on your initial deposit but also on the interest it accumulates over time!
What are the advantages of an RRSP?
A Registered Retirement Savings Plan (RRSP) is registered with the Government of Canada and is designed to help you save and invest for your retirement in a tax-advantaged way:
RRSP contributions can be used to reduce your annual income tax. That means the amount of money you contribute to your RRSP up to your allowable limit in any year (or within 60 days from the end of the year) can be deducted from your taxable income for the year or a future year. You can also make up for missed contributions in future years.
Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan. This provides tax-deferred investment growth, increasing the returns you earn and helping you reach your goals faster.
Normally, tax will be payable on withdrawals from the plan. Withdrawals can be made at any time within the terms of the investments in the plan. In retirement, incomes are often lower, reducing the amount of tax payable. You can borrow money from your RRSP for education or training (Lifelong Learning Plan) or to buy your first home (Home Buyer’s Plan) without paying tax as long as the money is repaid to the RRSP within the required time.
The benefit is highest if a high-income spouse or common-law partner contributes to an RRSP for a lower-income spouse or common-law partner. Care needs to be taken with withdrawals from a spousal RRSP, as certain withdrawals will be included in the contributor’s rather than the spouse’s income.
The earlier you start contributing to an RRSP, the more your contributions can grow over time to support you in your retirement years. You may want to look into setting up a spousal or common-law partner RRSP to help ensure that retirement income is more evenly split between both of you. The benefit is highest if a high-income spouse or common-law partner contributes to an RRSP for a lower-income spouse or common-law partner. Care needs to be taken with withdrawals from a spousal RRSP, as certain withdrawals will be included in the contributor’s rather than the spouse’s income.
An RRSP is a savings vehicle. You can choose the types of investments and savings accounts to hold in it. At Northern Birch we offer Guaranteed Investment Certificates (GICs), high-interest savings accounts and other investment options such as mutual funds through our partners†.
You can contribute to your RRSP until the end of the year you turn 71. At age 71, you must collapse your RRSP by withdrawing the funds, transferring the funds to a RRIF (Registered Retirement Income Fund), or using the funds to purchase an annuity.
Who can open an RRSP?
All Canadian citizens and permanent residents who are 18 years of age or older and have filed Canadian income tax can open an RRSP.
If you are a member of Northern Birch, simply call your Member Services Representative and we can help you make your 2024 RRSP contribution or set up automatic withdrawals for the next calendar year. If you are not a member of Northern Birch, becoming a member is to your advantage. With low service fees, competitive interest rates for savings and loan products, and personalized service that puts you first, Northern Birch is here to help you build a healthy financial future.
Contribution Limits for the 2024 tax year
Your contribution for 2024 is 18% of your earned income to a maximum of $31,560**. The last day to contribute is March 3, 2025. Unused contribution room from previous years can also be carried forward for use at any time.
One More Northern Birch Advantage
As a Northern Birch Credit Union member, you can earn 5% interest for 90 days in our special RRSP GIC* when you deposit your 2024 RRSP contribution by March 3, 2025.
-Your 90-Day RRSP GIC will earn an interest rate of 5% for the full 90 days.
-$100 minimum contribution.
-After 90 days, when the GIC matures, you can choose to continue with a Northern Birch RRSP GIC or select other investments, including mutual funds or our online brokerage partner†.
Start your RRSP Journey
Investing in an RRSP is a great start to building a strong economic future. Reduce your taxable income while saving for your retirement and earn a high-interest rate with our 90-day special! Earn money faster and accumulate investment returns tax-free. Through the benefits of compound interest, your RRSP can increase your savings rapidly over the years.
Visit our website for more investment opportunities provided by Northern Birch (northernbirchcu.com).
*Conditions apply. Rates are subject to change at any time without notice. Minimum deposit of $100. Deposit must be made by the end of business day on March 3, 2025. Interest rate is calculated per annum and paid out at maturity. Please visit our website for full terms and conditions. **Member is responsible for knowing their own personal contribution limit. †Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc.
This article is for informational purposes only. Northern Birch Credit Union aims to provide educational resources to help our members make informed decisions. Each member’s financial journey is unique, please consult a qualified professional for advice specific to your individual circumstances.
