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Top Tips for making the most of your retirement savings
Everyone loves to save tax. RRSP season is the perfect time to ensure you’re doing just that.
According to Stats Canada, Canadians collectively had $671,000,000,000* of unused RRSP contribution in 2011.
That’s about $30,000 for every working Canadian. Invested today, $30,000 could turn into $60,000** in 10 years time.
I don’t know about you, but that seems to me to be a fairly good incentive to consider what to save this year.
So if you’d like to do more saving for your retirement and, at the same time, save tax consider these three options. Also for first time home buyers you can borrow from your RRSP- Tax Free - for your downpayment.
1. Make it a bill.
To turn your retirement savings into a bill you might want to consider a RRSP catch-up loan.
A RRSP loan can be an excellent way to take advantage of unused contribution room, generate tax-savings and jump-start your retirement savings.
Setting up a loan is straightforward. Once you have the loan for the RRSP after 90 days you may be able to use the RRSP for your downpayment, even though you are still paying for that RRSP.
2. Get in the habit.
If you’re not ready to take the leap into a RRSP catch-up loan, consistent savings is where it is at.
In fact, the key to your long-term financial success and wealth is your ability to save. Consistent savings is also a great way to build for the future using the benefits of compounding and dollar cost averaging.
You can start small so you build the habit and set up annual automatic increases. It’s one less thing you have to think about and it removes the possibility that you simply won’t get around to it.
3. Dump in a lump.
Finally, did you receive a year-end bonus? If you haven’t already spent it, why not think about making a lump-sum contribution to your RRSP. You’ll create a tax refund for yourself that you can use later in the year.
Whichever way you save don’t miss the deadline
The deadline for contributing to your RRSP for the 2012 tax filing year is Friday, 1 March 2013.
The maximum RRSP contribution limit for 2012 is $22,970 (or 18% of your 2011 earned income) less, of course, any pension adjustment.
You can determine if you have additional RRSP contribution room by checking your last year’s Income Tax Notice of Assessment or by phoning the Tax Information Phone Service at 1-800-267-6999.
It’s not how you start, it’s how you finish
Whatever your retirement dream looks like, you can make it a reality by planning ahead and following a savings plan that is right for you.
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