Contributing to your RRSP
Withdrawing money pre-retirement
RRSP beneficiaries
Estate planning & your RRSP/RRIF
RRSP loans
Converting your RRSP to a RRIF

RRSPs for retirement

For many Canadians, the most tax-efficient way to prepare for retirement is to invest using a registered retirement savings plan (RRSP). Money invested in a registered plan grows tax-deferred until it is withdrawn, when it is taxed as income.

Who should invest in an RRSP?
• A registered retirement savings plan (RRSP) allows employed or self-employed Canadians to save for their retirement and reduce their annual tax bill (contributions are tax-deductible during pre-retirement income-earning years).
• There are many investments allowed, including foreign securities and mutual funds.
• Contributions are invested and earn tax-free income, providing investors with more savings to live on during their retirement (taxable when withdrawn).
• For those who have company pension plans, RRSPs can add extra retirement income to ensure that retirement needs are met. For those who don't have company pension plans, RRSPs can help fund retirement.
• Married couples can reduce their combined tax burden through a spousal RRSP (if one spouse earns more). At retirement, when the funds are withdrawn, income can be split to reduce overall taxation.
• RRSP funds are always available if and when needed (e.g., for maternity leave, career change, employment interruptions, etc.).

The effect of tax deferral on growth
For illustrative purposes, let's assume that an annual RRSP contribution of $19,000 grows at 9% over 30 years. If the investor is in a high tax bracket of 40%, the RRSP grows to approximately double what it would amount to if invested at the same rate in an unsheltered investment. The RRSP will be valued at $2,589,843, while the non-registered money will equal only $1,352,574, provided the non-registered account is not sheltered from tax and that all of its annual growth is fully taxed as interest income, not as capital gains or dividend income (although capital gains and dividend income would be the normal case and would incur lower taxes and hence a somewhat higher investment result than depicted here). You can see from the graph that time is the investor's greatest asset.

Other RRSP Information

RRSPs and Foreign Market Exposure
Spousal or Common-Law Partner RRSPs
Pension Severance/Retiring Allowance Transfers
Transfer of funds from a Registered Education Savings Plan (RESP) to an RRSP