Six ways to power up your RRSP throughout your career

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Six ways to power up your RRSP throughout your career

Why has the Registered Retirement Savings Plan (RRSP) remained so popular over the years? Because it continues to be a tax-efficient way to save money. No matter what point you are at, professionally, the flexibility of this plan offers benefits.

Your Carte Financial Group Advisor can help you leverage the power of an RRSP throughout your career. Here are six ways it can help reduce taxes and grow that important nest egg.

One: Millennials might defer the tax benefits. RRSP contributions are deductible from your taxable income. At the beginning of your career, with a modest salary, this may not seem important. Look ahead, though, to the day when your income matches your ambitions. Your marginal tax rate will also rise ̶ the maximum percentage you must pay in taxes. That’s when you will need some tax deductions. Here are two options to consider.

  • The first is deferring your RRSP contributions until later. You can focus on other savings, such as growing a Tax-Free Savings Account. The RRSP contribution room ̶ the amount you can invest annually ̶ will continue to accumulate. You can keep this room for the time when you most need relief from a heavy tax load.
  • Or you could start an RRSP now. Because the sooner you begin saving, the bigger your investment will grow throughout your career. Then defer claiming the tax deduction until you need that tax break.

Two: Borrow from yourself to enhance your life. Planning to buy your first home? Or considering getting more education to further your career? These are the two life goals for which you can borrow from your RRSP, tax-free. As long as you repay the money within a set time frame. Ask your Carte Financial Group Advisor for more information, or visit to learn about the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP)

Three: Midlife is time to work that tax strategy. Your career has matured. That long-awaited promotion came with a great raise. Unfortunately, your marginal tax rate has also climbed. Time to power up your RRSP contributions and get the maximum tax credit. With the right planning, you could drop down into a lower marginal tax bracket.

Four: Go for growth. Your RRSP fund needs to be well managed to ensure it grows strongly throughout the years of your career. Work with your Advisor to develop a mix of investments in your fund, for a satisfying growth rate.

Five: Older adults look forward to lower taxes. Throughout your professional life, you’ve been contributing to your RRSP. You’ve enjoyed tax deductions while growing your retirement investment. Taxes owed on the money have been deferred until you begin withdrawing the funds. At that time, most likely, your income will have dropped, and you’ll be in a lower tax bracket.

This is a major benefit of an RRSP. Tax deductions today, and the prospect of less tax to pay in retirement.

Six: Get your golden years planned. Retirement is close. You need to strategize how to enjoy the most income with the least amount of tax to pay. Work with your Financial Advisor on this. Consider any pensions, investments, and your RRSP. Your Advisor will help you plan when to withdraw funds, and from what source, to minimize your tax load.

Use the power of an RRSP to save for tomorrow while enhancing your life today. Ask your Carte Financial Group Advisor how to make this savings strategy work even harder for you, all through your career.