But there's also another group who aren't buying in because they think they can't afford it, or they simply have no idea how to get started. If you're in that group, this article is for you.
Why you need an RRSP
Whether you're financially savvy or not – but especially if you're not – RRSPs are a fantastic way to save for retirement. Think of an RRSP account as a lockbox for your savings, only better. Here's why.
• Contributions are tax deductable, bringing down your gross income for income tax purposes.
• Your RRSP is a tax shelter. You don't pay tax on your investment income (until it's withdrawn), meaning the overall value grows much faster.
• You won't be taxed on your RRSP until you make withdrawals, presumably during retirement. It will be taxed as income – most likely at a lower rate since you'll be earning less then as compared to now, your peak earning years.
How do I set up an RRSP account?
You can set up your RRSP through any financial institution: Your bank, credit union, trust or insurance company.
Meet with a personal banking advisor so they can walk you through the process and the different types of RRSPs they offer.
RRSPs are investment portfolios, and returns will vary depending on market conditions. Your RRSP portfolio may contain mutual funds, savings deposits, treasury bills, GICs, equities and/or other options.
Talk with your expert to find the mix that works best for you given your tolerance for risk (and potential reward), as well as whether an individual or spousal RRSP would be best for you.
Page 1 of 2 – Do you know how much you should be contributing to your RRSP yearly? Find out on page 2.
