When we retire we dream of beaches and vacations and not having to work another day in our lives. This dream can become reality by investing in your retirement through an RRSP.
An RRSP is a Registered Retirement Savings Plan, which is not to be confused with an RSP. With an RSP you are not eligible for tax exemptions from the Government; with the RRSP you are eligible. Essentially, an RRSP is an investment account that you set up for savings toward your retirement. You can set this up with any bank or credit union as long as you are considered to have an “earned income” taxable in Canada. These incomes include salary and self-employment; there are other incomes that may be acceptable, you can check with Revenue Canada to see about other acceptable incomes. Some employers also have programs for employees to set up RRSP’s. The amount you are contributing will be deducted automatically from your paycheck. They may also match a certain amount or percentage of your contribution for signing up as an added incentive.
Saving for your retirement is very important. The government does offer programs such as CPP (Canada Pension Plan) and OAS (Old Age Security) to those who are ages 65+. CPP depends on how much you have contributed to the plan throughout your working years. If you have gone through financial hardships and/or have not worked, your contribution those years would have been less, in turn making the amount of CPP you are entitled to less. This is a government supplemented income therefore, it may not be enough to live the life you are accustomed to and could be significantly less than what you were making during your working years. Having an RRSP can be a safety net and provide you piece of mind, knowing that you have a secured amount of money that you can take advantage of when you retire. Having an RRSP, you can maintain the life you are used to and may even be able to take the trip you have promised yourself you would take when you retire. You worked for the last 40 plus years, you deserve it!
Contributing to you RRSP is as simple as saving money; the sooner you start the more you will save. For Example: if you put a minimum payment of $20.00 a pay into your RRSP and are paid bi-weekly, you could save up to $19,200 in 40 years. This figure does not include interest that will accumulate on the amount saved. More is of course, always better, but you should only contribute what you can afford.
RRSP is the best planed financial security that you can have for your retirement and it is never too soon to start. Think of it as an investment in your future. Saving for your future is important, why not start now?