Having a Registered Retirement Savings Plan (RRSP) is the best way to start saving up for retirement, as early as you can. The RRSP has several plans
Having a Registered Retirement Savings Plan (RRSP) is the best way to start saving up for retirement, as early as you can. The RRSP has several plans designed for the ease of your saving culture based on income and/or expenses. However, beyond being a great plan to prepare for retirement, RRSP has other beneficial features that help you to do more while saving for retirement.
1. Buy a House
With the RRSP Home Buyers’ plan, you can get the capital you need as a down payment to buy a home. The Home Buyers plan is only available on certain conditions so it is best to make sure you are eligible for the plan and get details on the procedures involved. The RRSP Home Buyers’ Plan allows you to take as much as $35,000 from your savings plan, as an individual, in order to make down payment for your intended home. That way, you get to have your dream home in place and paid for, before retirement.
2. Complete Education
Another special plan within the RRSP is the Lifelong Learning Plan. This grants you up to $20,000 as tuition and to cover any other incurred costs while you start or complete your education at any level. Similar to the Home Buyers’ plan, there are certain terms and conditions attached but, as long as you are eligible, you get to achieve your dreams.
3. Save More
While the RRSP is essentially saving towards retirement, it isn’t just a piggy bank to keep your money in. RRSP also grows your savings as tax-free investments that are managed and promoted by the Canadian government. With an RRSP, your savings are likely to grow even faster, giving you the opportunity to have saved more at the end of the day.
4. Pay Less Tax
As mentioned above, the RRSP is tax-free but it gets better. The saved sum is usually deducted from your actual income so there is a deduction on the tax you have to pay on your earnings. As the math goes, having an RRSP means that when you are earning more, you are paying less tax.
5. Spousal RRSP
Another great feature of the RRSP is the spousal consideration. If one party earns more net income than the other, you can support the other person’s retirement savings by creating a spousal RRSP. Rather than being the sole contributor to the savings plan, and bearing heavier tax deduction, the savings become split and tax payment is reduced for both parties.
Creating an RRSP is not just great when preparing for retirement, it also helps you to live a better life while achieving your dreams!