But have you stopped to think, how will you pay for it all? Where is the money coming from?
Have you done all you could to set yourself up for a comfortable retirement?
Whether retirement is just over the horizon or a distant thought, you have options. It’s never too early or too late to start saving!
What is an RRSP?
A Registered Retirement Savings Plan (RRSP) is a savings plan, initiated with the Government of Canada that you can contribute to for retirement purposes. Contributions and interest earned are tax exempt, as long as they stay in the plan.
There is no minimum age for opening an RRSP. As long as you are a Canadian citizen with an income and file your tax returns, you can contribute. However, RRSPs must be collapsed by age 71.
Any early withdrawals (before retirement) will be subject to a withholding tax, which is taken by your financial institution at the time of withdrawal and paid directly to the government on your behalf. There are exceptions to this if you are going back to school or purchasing your first home.
Not just for retirement
Although well known for retirement, RRSPs can also be used in other ways.
The Home Buyers’ Plan (HBP) allows you to withdraw funds from your RRSP to buy or build a qualifying home. The funds can be used for your down payment, and you have 15 years to pay the funds back into your RRSP.
With the Lifelong Learning Plan (LLP), you can withdraw up to $10,000 in a calendar year to finance full-time training or education for you or your spouse or common-law partner.
Know your contribution limits
You are responsible for knowing your RRSP contribution limits. Your allowable RRSP contribution for the 2022 tax-year is the lower of 18% of your earned income from the previous year, or $29,210.
Be careful not to go over your limit! If you over-contribute by more than $2,000.00 you will be taxed, and the government will charge you 1% for each month you are over your limit.
The benefits of an RRSP
Not only do RRSPs allow you to stash away money for retirement, but your contributions are tax-deductible. This is especially helpful in your higher earning years, as you can lower your income tax by making an RRSP contribution.
Your Options
Investing at Northern Birch Credit Union gives you the opportunity to choose from a variety of investment options.
Reduce your taxable income while saving for your retirement and earning a high interest rate! Earn money faster and accumulate investment returns tax-free. 100% of RSP earnings can be compounded and re-invested, which increases your savings rapidly over the years.
Learn more about your all of your options at Northern Birch Credit Union, your trusted community financial institution, by visiting their website.
