The Globe and Mail | RRSP bashers: Here’s how the math really works
After the weather, the thing Canadians love to complain about the most is the tax they pay on RRSP withdrawals.
Well, time to stop grumbling. It may seem like you’re getting hosed on your registered retirement savings plan withdrawals, but you’re just paying the government the tax you initially deferred, plus the growth of that tax.
Many investors don’t get this.
“There’s a big misunderstanding that the money in an RRSP is actually your money. It’s really a partnership between your money and the government’s money,” says Jamie Golombek, managing director of tax and estate planning at CIBC Wealth Advisory Services. “If people have $100,000 in an RRSP, they don’t really have $100,000.”
Here’s something else a lot of people don’t get: Even after paying the government its share, most people will be far better off than if they had invested in a non-registered account.