Strategies to maximize your RRSP

 

Contributing to your Retirement Savings Plan (RRSP) and the resultant tax savings is only the first step towards maximizing your RRSP's growth. This section will introduce you to strategies that can help maximize your RRSP:

​

​

Contributing to your RRSP early

 

The vast majority of Canadians make their contributions at the end of the tax year. By making your RRSP contribution either at the beginning of the year or by making regular monthly contributions, you will build a significantly larger RRSP. This is due to the additional years of compound growth that results from making your contribution sooner rather than later.

​

​

​

Spousal RRSPs

 

One of the most effective methods of income splitting between spouses is achieved by contributing to a spousal RRSP. The objective of this strategy is to provide both spouses with similar incomes and similar income tax rates in retirement.

​

​

Timing your RRSP deduction

 

While it is advisable to make your RRSP contribution each year, you can choose to delay claiming the tax deduction until a future tax year. If your income tends to fluctuate from year to year it may be beneficial to defer the tax deduction to a future year when your income, and thus your tax rate, will be significantly higher.