Registered Retirement Savings Plans (RRSPs) were introduced by the federal government in 1957 to help Canadians save for retirement.
Today, RRSPs can be an integral part of your overall financial strategy, but how can you ensure you’re getting the most out of it?
There is no one-size-fits-all solution when trying to determine how to get the most out of your RRSP. It’s important to work with a financial advisor to consider what makes sense for your specific situation.
An RRSP is only one component of your overall financial strategy and may play a different role for each person. Working with a financial advisor and other professionals can help you determine the financial strategy that best fits your personal needs.
Below are a few ideas you can consider in your discussions with your financial advisor:
Start early. Time is one of your greatest assets, so take advantage of it. The longer you save the more opportunity you could have for your investments to grow.
Contribute regularly to your RRSPs as it fits your specific situation.
Give your RRSP an annual raise! As you continue to progress in your career and income make sure you are also contributing more to your RRSP. The more money you save, the more you may have at retirement.
Reinvest your tax refund into your RRSP or TFSA (Tax-Free Savings Account) rather than making a large purchase. It could be a good time to re-evaluate some of your larger purchases.
Take advantage of employer contributions. There are few, if any, investment options that can compare with the value of your employer’s match and its role it can have on your retirement strategy. Even if your ability to save may be modest, you should take advantage of the full employer match, if available.
Ultimately, there is no simple answer for the question of how to get the most out of your RRSP. Each investor’s situation differs, and what may work for one investor might not make the most sense for you and your financial goals.
Speak with a financial advisor to understand the importance of an RRSP and the role it may play in your long-term financial strategy.
Bruce Shepherd is a financial advisor with Edward Jones. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.