If you’ve just entered the workforce, retirement may seem a long way off. So far off that, you may be wondering if you need to bother contributing to a Registered Retirement Savings Plan (RRSP) yet.
The short answer is it’s never too soon.
If you are 18 years of age or older, you can contribute to an RRSP and the earlier you start, the better. One advantage of an RRSP is that your contributions entitle you to a tax deduction. In addition to that, they generate investment income that isn’t taxable until it’s withdrawn (usually at a lower rate because retirement income is generally lower). The interest earned on your contributions also compounds, meaning the sooner you contribute, the longer they’ll have to compound and grow.
It’s a good idea to contribute as soon as you possibly can.
Even in smaller amounts!
You can contribute annually up to 18 percent of your income (less the pension adjustment), up to a maximum of $27,830.
When contributing to an RRSP, you can choose from many different investment options, including investment funds, guaranteed interest funds, stocks, bonds, and more. These options mean you can choose how to invest the money in your RRSP account.
Contact your neighbourhood branch today if you’ve never contributed before and are interested in learning more about RRSPs and other investment options.