As the RRSP deadline approaches, here’s what to know as you save for retirement

Have you started contributing to an RRSP? Here's what to know about the popular vehicle for retirement savings, including the deadline to put money in this year.

April might hold the dubious distinction of “tax month” in Canada, but around February many Canadians start their tax preparation with an eye to retirement planning. Why?

The answer revolves around Registered Retirement Savings Plans, or RRSPs. These special accounts come with strict limits on when and how much you can contribute, with the deadline for contributions allocated to the 2022 tax year only weeks away.

While retirement for some could still be many decades away, experts say that doesn’t mean saving and planning for that day isn’t a young person’s game.

In fact, taking advantage of an RRSP’s compounding interest features is in many ways suited for those with plenty of time to save, says personal finance expert Rubina Ahmed-Haq.

“Ideally, you want to be saving money now for 25, 30 years from now so that your money has time, your investments have time for all the ebbs and flows of the market to get all the dividends to continue to grow over time, rather than trying to time the market of when to get in and out,” she says.

While that may be true of many investment vehicles, Ahmed-Haq says the RRSP is especially popular because it’s “the most tax-efficient way to save for your retirement.”

So, what is an RRSP? Why is it so “tax-efficient?” And why is there a deadline? Here’s all you need to know to get started on your retirement savings.

An RRSP is an account that’s registered with the Canada Revenue Agency. In it, you can hold investment products like GICs, mutual funds, bonds or use it just as a regular savings account. It’s available to anyone under the age of 71.