March 30, 2021

Save money by planning ahead

Happy New Year! We hope you all had a lovely holiday season with your family. With a new year, comes a time to reflect on the past year, and plan for an even better year ahead. One of the best things you will do for your future is investing in an RRSP plan.

A Registered Retirement Savings Plan (RRSP) is a savings plan that you establish, registered with the Canadian government, where you or your spouse or common-law partner contribute towards your retirement. These funds become available to you during your retirement, however, depending on the plan and provider you chose, you may have the option to withdraw some of the money towards the purchase of your first home or education.

These contributions help reduce your tax, and any income generated in the RRSP is usually tax-exempt as long as the funds remain in the plan. Usually, people who invest in an RRSP use the tax deduction right away. However, you can make a contribution now and save the deduction for later. If you know youll be getting a big bonus or that your income will be significantly higher in an year or two, then you can save this to reduce your tax at a later time.

First-time homebuyers may coordinate their RRSP strategy in such a way that they can purchase a new home. Through this, a homebuyer can borrow up to $25,000 from their RRSP for purchasing a home.

You can also use an RRSP for financing your education or your spouses under the plan known as Lifelong Learn Plan. You may be able to borrow up to $20,000, which must be paid back within a period of 10 years.?Just like the Home Buyers Plan, you can make withdrawals to fund training or education without having to pay any tax. This is applicable if you use the form RC96 provided by the government.

Planning ahead can save you money in the long run, and help you lead a comfortable lifestyle after retirement. For more information, contact us, Inforce Life at (416) 321-6000.