RRSP turns 65 this year but is far from ready to retire
BNN Bloomberg
Canadians have been scrambling to sock away their retirement savings and lower their tax bills in the popular tax shelter since 1957. Aside from a few tweaks over the decades, the basics of the RRSP remain the same.
The rush to make a registered retirement savings plan (RRSP) contribution before the deadline (which falls on March 1 this year) is nothing new.
Canadians have been scrambling to sock away their retirement savings and lower their tax bills in the popular tax shelter since 1957. Aside from a few tweaks over the decades, the basics of the RRSP remain the same.
How RRSPs work
RRSP accounts can be set up through just about any financial institution. Contributions can be deducted from taxable income in any calendar year going forward, but the deadline for it to apply to last year is March 1.
Contributions can be invested in just about anything; stocks, bonds, mutual funds, exchange-traded funds, options — whatever. You can even keep them in cash.
Those investments can grow tax-free for decades until they are withdrawn; that’s when they are fully taxed — ideally at a low marginal tax rate in retirement.
