How can an RRSP help me save?
When you put money in an RRSP, you can get a tax break in three ways:
To see the difference the tax savings can make, read Taking shelter: Gwen and Karima’s story.
- You don’t pay tax on the money you contribute as long as it stays in the plan. This reduces your taxable income – which in turn reduces the amount of tax you pay. That puts extra money in your pocket today.
- You also don’t pay tax on the money you make investing your savings, as long as the money stays in the plan.
- If you wait until you retire to take the money out of your RRSP, and your total income is lower, you’ll pay tax at a lower rate on the same dollars.
You can put up to 18% of your income into your RRSP each year (up to a maximum dollar amount). If you contribute less, or miss a year, so you can “catch-up” later. Look at last year's Notice of Assessment to see how much you can contribute to your RRSP. Learn more now about contributing to your RRSP.