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Why Contribute to an RRSP?
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Other Resources |
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FAQ Section
Visit our FAQ section for more information on RRSPs and other investment options.
Rates
If you are looking for our investment rates, click here
| | Most people know that with an RRSP you can save on taxes, however there are many other benefits of RRSPs you should consider when making your decision of whether or not you'll contribute.
Immediate Tax Savings
Tax-deferred Compounding
Compound interest
Build Your Retirement Nest Egg
Home Buyer's Plan
Life Long Learning Plan
Emergency Funds
Income Splitting
Retirement Tax Savings
Peace of Mind
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Immediate tax savings: get a break on your taxes, after all it is your money, you earned it. RRSPs are tax deductible; they reduce the amount of taxes you owe by lowering your Gross Annual Income. Making RRSP contributions allow you to reduce the amount of taxes you pay each year and empowers you to save more sooner.
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Tax-deferred compounding: since your RRSPs are not taxed until withdrawn, they grow in a tax sheltered environment. This allows the value of your RRSP investments to grow protected from taxes.
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Compound interest: while you RRSPs sit in your investments portfolio they accumulate value and compound the growth of your savings through compound interest. This means your money works for you by earning interest on top of interest. The sooner you begin to invest the more compounded interest you'll earn in your lifetime.
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Build your retirement nest egg: during your peak earning years, you have more money to invest in your future. This is the best time to begin building your retirement nest egg by investing in RRSPs. Not only are you more able to afford RRSPs during your peek years, but the funds you invest now for your future will earn you more in the long run with the magic of compound interest.
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Home Buyer's Plan: once you're ready to invest in purchasing your first home it is a wonderful, but most often financially difficult time. With RRSPs you can withdraw up to $20,000 from your RRSP, without penalty or tax, to be applied to the purchase of your first home. You then have 15 years to repay your RRSP.
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Life Long Learning Plan: if you're considering upgrading your education to invest in a brighter future, RRSPs can ease your financial stress. You can use up to $20,000 of your RRSP to pay for your own or your partner’s education. Keep in mind, the withdrawal is tax-free and can be paid back to your RRSPs over ten years. Just enough time for you to finish your higher learning and begin your bright new career!
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Emergency funds: at times of lower-income earnings RRSPs can be used to bridge the low-income years when taking maternity or parental leave, or when making a career change. However, please keep in mind there are tax consequences. Withdrawals are considered taxable income.
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Income Splitting: If one spouse/common-law partner will be in a higher tax bracket after retirement, as much of the RRSP contributions as possible should be accumulated in the name of the spouse/common-law partner who will be in the lower tax bracket. By doing so you can take advantage of a lower tax rate and the compounded interest accumulated on the combined savings.
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Retirement tax savings: once you are ready to withdraw funds for your retirement, you will likely be in a lower income tax bracket than when you were working. This allows you to save on taxes and enjoy more of the money you invested for your future.
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Peace of mind: after retirement your lifestyle endures a significant income level change. An RRSP can be used to supplement your retirement income by "topping off" your pension. Empowering you to maintain your lifestyle and do the things you love.
One of the best reasons to begin your RRSP contributions early in your career is to take advantage of the long-term benefit of compound interest, interest earned on top of interest. You could earn more funds in the long run by investing smaller amounts today vs. having to invest larger amounts later on in life.
How can I Save for an RRSP?
Types of RRSPs Available
Calculation of RRSP Deduction Limit
Benefit From Professional Advice
For most savers, current work & family commitments do not leave time to adequately manage your investments. This can be a full time job on its own. If so, you should be seeking professional advice to make sure that your retirement plans are on track. An educated professional advisor deals with these issues daily, and stays in touch with the strategies that can help you make the most of all your investments including your RRSP’s.
Find an advisor that you feel comfortable with and which you have developed some trust in. The recommendation of a satisfied friend or associate goes a long way to help you find such an advisor. You will want to know about the advisor’s credentials. Furthermore, you will want to look for someone who will also help you develop an overall plan and not just select investments for you.
It is also important to determine how your advisor is compensated. Some charge fees, and some are compensated based on commission on a product they sell you, some strictly earn a salary. Once you have selected your advisor, make sure you review with him or her your progress at least on an annual basis.
Wise Financial Guidance To Empower You
We would be happy to provide financial guidance. For more information on any of our investment options, you can meet with an OMISTA Expert at any of our three branches, or your Credential Financial Strategies Inc. Representative Ozzie MacKay. To develop an investment portfolio that meets your needs and objectives, you can meet with Ozzie MacKay, our Credential Financial Strategies Representative. He can explain your options and design the most cost effective plan for you.
Credential Financial Strategies Inc. is a member company under Credential Financial Inc., offering financial planning, life insurance and investments to members of credit unions and their communities. ®Credential is a registered mark owned by Credential Financial Inc. and is used under licence.
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