The Canadian government has taken several steps to help Canadians make the most of their finances to enjoy financial security as they grow older. Young Canadians now realize the importance of preparing for their retirement years from an early age.
The Registered Retirement Savings Plan (RRSP), for instance, is an ideal way to accumulate wealth to give you a comfortable cushion for your retirement. The RRSP is a retirement saving and investing vehicle, which allows you to place your money into an account to grow tax-free until you withdraw it. Retirees hold RRSPs very close to their hearts.
The RRSP is not a guarantee that you will enjoy a comfortable life in retirement. It does, however, guarantee that the earnings from your investments stored in RRSPs will compound without being subjected to tax as long as you do not withdraw them.
Making the most of your RRSP is a matter of following a disciplined approach. I will discuss a couple of things you should do to ensure you get the most out of this excellent retirement savings vehicle.
Contribute to a spousal RRSP if possible
If it is possible, you should take advantage of a spousal RRSP. This is a retirement savings plan for your spouse or your partner’s retirement that offers benefits over your RRSP. Let’s suppose one of you earns $50,000 per year and the other earns $100,000 a year. The individual limit you can contribute is 18% of your income from last year to the very last dollar amount.
If both of you had an…