Well, it’s that pesky time of the year again…RRSP season! As an ex-financial advisor, this time of the year always causes me to have flashbacks of long lines and stressed out individuals. Thankfully, it doesn’t need to be that way for you and a couple simple tips can save you a lot of time and stress.
This year, the RRSP deadline falls on Monday, February 29th, 2016. This is the last day that RRSP contributions can be applied to defer your 2015 income taxes. The first tip is to not go into the bank at the last moment! This seems like common sense, but you would be surprised how many people inadvertently do this. Save your precious time and dodge some stress by making an early appointment with your banking representative. Or if you’re really busy, you can even make contributions over the phone! Seriously, don’t get caught in the last moment rush because it can really suck.
How Much Should I Contribute to My RRSPs?
This is another big question! Optimally, you should be following a retirement plan because if you arbitrarily contribute random amounts of funds then you may under save or even over save! You want to have a plan that gets you to your goals and doesn’t take any funds away from your other financial goals. Actually, with a retirement plan, it’s likely that you won’t even need to do any last moment RRSP contributions!
Feel free to join us for a Retirement planning presentation on February 6th, 2016 in Toronto; more information can be found here.
If you’re unsure about how much you want to contribute to your RRSPs and don’t have a financial plan, then you can make a value judgement based on your tax bracket. Simple look at your applicable tax rates and approximate how much that you will save. For example, if you earned $75,000 in Ontario, then for every dollar contributed you will defer .3298 cents. It’s important to note that tax rates are tiered, so if your RRSP contribution lowers you into a lower tax bracket then you then defer income at the lower tax rate. This technique will not take you exactly to your retirement goal, but will point you to the right direction and optimally save you tax dollars in the meanwhile.
Where Should I Invest My Money?
This is a big question and yet again your investment must work with your retirement plan. However, if your undecided or rushed, then you can just deposit your funds into a simple RRSP savings account or even a low-fee mutual fund that offers long-term growth. Right now, many RRSP savings accounts are offering temporary promotional interest rate (annual rate) until the end of March. This way you can decide where to invest the money later and not have to worry about pushy sales people.
That’s all the tips for now, but if you can contact me at email@example.com or 647-289-0012 to make a retirement plan or answer any questions. Thanks for reading and don’t forget to sign-up to our newsletter for other similar personal finance information.