Marketing Monthly: RRSP’s (February 2022)
In this issue:
- Everything you need to know about Registered Retirement Savings Plans
- RRSPs vs. upstart TFSAs: The old standby still has its place
- Faced with rising inflation, many Canadians have no capacity to contribute to their RRSP
- How early RRSP withdrawals can help some retirees come out ahead
- Retirement savings stalled by COVID-19?
- RRSP Savings calculator
Everything you need to know about Registered Retirement Savings Plans
It’s February – and Registered Retirement Savings Plan (RRSP) season again. What do you need to know to take advantage of the tax savings it offers and maximize this investment?
Here’s a basic primer that can walk you through what it is, and its advantages and disadvantages.
RRSPs vs. upstart TFSAs: The old standby still has its place
One of the most popular queries investment advisors get these days from both young and older investors is whether a TFSA or RRSP is the best way to save money for retirement.
Tax-free savings accounts were introduced in 2009 and have become an alternative or complement to traditional registered retirement savings plans, launched in the 1950s. While the newcomer has its particular benefits, including an ability to withdraw money without a tax hit, the good old RRSP still has its place for both the 30-year-old and 60-year-old investor, experts agree.
The decision on which route to take may come down to tax planning.
Faced with rising inflation, many Canadians have no capacity to contribute to their RRSP
A growing percentage of Canadians are unable to contribute to their RRSPs due to financial constraints.
A new report issued by Edward Jones Canada reveals how Canadian investors are approaching this year’s RRSP season as they face growing prices and the ongoing COVID-19 epidemic.
According to the study, 33% of Canadians want to contribute to an RRSP this year, similar to last year. The percentage of Canadians who want to give the maximum amount stayed constant at 10%.
The capacity of Canadians to pay their contributions may be harmed by rising inflation and the resulting increases in living and lifestyle expenditures. Just over half (55%) of those who didn’t contribute to an RRSP this year – which was up 11% from the previous year – claimed they couldn’t afford it.
How early RRSP withdrawals can help some retirees come out ahead
Registered Retirement Savings Plans are the primary retirement savings tool for Canadians and at this time of year, all the attention is on the accumulation stage. But how you eventually decumulate the assets in an RRSP also matters: too much tax deferral and saving too long can be bad things.
RRSP savers should strive to minimize lifetime tax and maximize retirement income over simply postponing RRSP withdrawals as long as possible. In the right circumstances, accelerating RRSP withdrawals can make you better off in the long run.
Retirement savings stalled by COVID-19?
There’s nothing like a pandemic to throw a wrench into the best-laid plans. And COVID-19 affected a lot more than just vacations, celebrations and get-togethers. Many Canadians found that it also affected their ability to build their retirement savings. In CPA Canada’s Canadian Finance Study 2020, one in three Canadians said the pandemic had negatively impacted their personal finances, and 21 per cent of pre-retirees said that they planned to delay their retirement date.
Here are some ideas to help you get back on track from Christopher Cione, senior PlanRight advisor.
RRSP Savings calculator
Estimate how much your registered retirement savings plan (RRSP) will be worth at retirement and how much income it will provide each year.
As you get closer to full retirement, your priorities usually shift from growing your money to spending your money. In response, you will need to shift your investment mix from higher- to lower-risk investments to preserve your money and provide income. This will mean there is less chance that your investments will lose money, but they may also yield a lower expected investment return.
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