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registered retirement savings plans (RRSP's)
What is an RRSP?
An RRSP is an individual savings plan that enables you to make tax-deductible contributions over a
number of years; the contributions are invested and earn tax-free income, providing you with savings to live on
into retirement.
The Advantage
RRSPs provide you with an exceptional opportunity to save for retirement. Not only are your
RRSP contributions tax deductible, but all of the income earned on those contributions compounds on a tax-deferred
basis. RRSP investing is one of the most sound financial moves you can make.
Advantages of the RRSP:
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Provide an exceptional opportunity to save for retirement |
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RRSP contributions are tax deductible |
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All income earned within the RRSP accumulates tax free until withdrawn |
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Save more now and work less later |
How does it work?
A Registered Retirement Savings Plan is a savings plan that is "registered" with Canada Customs and Revenue
Agency (CCRA). It allows you to save money for your retirement on a tax-sheltered basis. That means you don’t pay
tax on the income your investments earn until you withdraw the money from your RRSP.
You can choose to invest your money in several investments including savings accounts, segregated funds, mutual funds,
guaranteed investment certificates, stocks and bonds, according to your own particular investment goals.
At retirement you can transfer your accumulated RRSP into a Registered Retirement Income Fund (RRIF) where they
continue to grow tax sheltered until withdrawn.
Start early in life and save more!
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| RRSP Workbook Example - save more now and work less later!
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Marc, age 45
Marc contributes $2,000 a year until age 65 into his RRSP. Based on a 6% average annual compounded
return, Marc's total RRSP investment will be $42,000. When he turns 65, the total worth of his RRSP will
be $84,785. |
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Shannon, age 30
Shannon contributes $1,000 a year until age 65 into her RRSP. Based on a 6% average annual compounded
return, Shannon's total RRSP investment will be $36,000. When she turns 65, the total worth of her RRSP will
be $126,268! |
| As you can see when Shannon turns 65, her RRSP will be worth more than Marc's because Shannon's RRSP
had more time for a compounded return on her investment.
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The earlier you invest - the more you earn!
Begin your retirement plans today by contacting Peter McNally, Certified
Financial Planner at McNally Financial and Insurance Group.
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