Why pay more than $3,000 in taxes? If you can contribute this amount to your RRSP?
If your taxes are a big deal, make sure you start your year with a structure.
Why pay more than $3,000 in taxes? If you can contribute that amount to your RRSP?
It is important to determine how much to contribute to your RRSP.
If you do it right, you'll maximize your tax savings now and ensure a good income in retirement.
If you do it wrong, you could end up paying more tax than you need to.
Fortunately, planning how much to contribute to your RRSP is not complicated; once you understand all the elements involved.
In this article, we'll review everything you need to know about planning your RRSP contributions and maximizing the tax benefits.
Who can contribute to an RRSP?
You can contribute to an RRSP if you :
have earned income - have a social insurance number
have filed an income tax return
have RRSP contribution room are under age 71.
The end of the year you turn 71 is your last opportunity to contribute. How much should you contribute to your RRSP?
When you contribute to an RRSP, you are investing in a better quality of life for your future. So if you have money to contribute, it's almost always a good idea to do so.
As a general rule, you should aim to contribute at least 10% of your gross income each year to your retirement savings.
Start contributing in your early 20s, and that 10% per year could save you a significant amount of money and provide you with a comfortable retirement.
If you start contributing later in life, say in your late 30s, 10% a year may not be enough.
Find the right number with a financial plan Remember, these numbers are just general guidelines.
Ultimately, the only way to know if you're contributing enough is to develop a financial plan that takes into account when you plan to retire, all the different sources of income and savings you expect to have, and how much you plan to spend each year.
With this information, you can work backwards to determine if you are saving too much or too little.
It can be difficult to create a good financial plan on your own, so I highly recommend working with a financial advisor.
If you have any questions! Please feel free to contact me.
Source CI Investment