We’re living longer—here are two ways to boost retirement savings and income + MORE Jan 18th

Maybe you’re taking your first steps towards saving for retirement. Or maybe you’re in the home stretch. Either way, you will likely be using a registered retirement savings plan (RRSP). This Canadian tax-sheltered savings account is more than six decades old, and it has formed the backbone of retirement planning for most Canadians since the ’80s, when employer-sponsored pension plans began their decline.

Even if you’re familiar with RRSPs, there may be nuances worth exploring here. And sometimes there are new developments that reshape traditional retirement planning. Most important today is the increase in life expectancy over the past generation. That’s great news, but it also presents a challenge: Investors may need to make their money last even longer in retirement.

Fortunately, the investing world also has fresh ideas and financial products that should rise to the occasion.

RRSPs and tax considerations

RRSPs are best known for their tax deferral. Investments grow tax-deferred inside the account and are only subject to income tax when they are withdrawn…

The year 2022 was the one when inflation morphed from a minor concern to a major worry for investors, especially those hoping to retire sometime in the not-too-distant future. While central banks are well into their programs to curb inflation through periodic rises in interest rates, it could take the better part of 2023 or beyond before inflation returns to the 2% annual target with which most governments are comfortable. The Bank of Canada (BoC) has had a 2% inflation guideline since 1995.

How Canadian investors are responding to inflation fears

Not surprisingly, inflation is of particular concern to retirees and those hoping to retire soon. A recent Leger/Questrade poll, entitled the 2023 RRSP Omni report, found that while 87% of Canadians are worried about rising prices, many are still looking to invest. In fact, 73% of registered retirement savings plan (RRSP) owners plan to contribute this year, and so do 79% of those with tax-free savings accounts (TFSAs). The confidence in investing is surprising despite the fact Canadians are fretting over how inflation will impact the value of their RRSPs (69%) and TFSAs (64%)…

Putting money into a registered retirement savings plan (RRSP) is one of the best ways to save for retirement. Some people choose to contribute a lump sum to their RRSP at the beginning of the year (or right ahead of the tax-filing deadline), while others prefer to contribute regularly through automatic withdrawals or deposits. Whichever option you choose, be aware that there’s a limit to how much you can add to your RRSP in any given year. The RRSP contribution room calculator above will get you the numbers you need, but keep reading for a better understanding of RRSPs.

What’s an RRSP?

A registered retirement savings plan, or an RRSP, is a savings account that you open at a bank or other financial institution. It is registered by the federal government of Canada for tax savings, and you can contribute to the account up to an annual maximum amount. 

Compare the best RRSPs in Canada
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What’s special about RRSPs?

Contributions to RRSPs are deductible, meaning they can be used to reduce your taxes…