Reasons To Open A Registered Retirement Savings Plan (RRSP)

1. Contributions are tax-deductible

You claim your RRSP contribution as a deduction on your tax return.

2. Savings grow tax-free

You won’t pay any tax on investment earnings as long as they stay in your RRSP. This tax-free compounding allows your savings to grow faster.

3. You can convert your RRSP to get regular payments when you retire

You can transfer your RRSP savings tax-free into an RRIF or an annuity when you retire. You’ll pay tax on the regular payments you receive each year — but if you’re in a lower tax bracket in retirement, you’ll pay less tax.

4. A spousal RRSP can reduce your combined tax burden

If you earn more money than your spouse, you can help build their tax-free savings by contributing to a spousal RRSP. Retirement income will then be split more equally between the 2 of you — which may reduce the total amount of tax you pay.

5. You can borrow from your RRSP to buy your first home or pay for your education

You can take out up to $35,000 for a down payment for your first home under the Home Buyers’ Plan (HBP). You can also take out to pay education costs for you or your spouse under the Lifelong Learning Plan (LLP). You won’t pay any tax on these withdrawals as long as you pay the money back within the specified time periods.