Did you manage to make your RRSP contributions on time before the deadline? Last week we spoke about 4 costly RRSP mistakes to avoid. With the new tax season now in full swing, this week let’s take a “glass half full” approach and discuss the best ways to start the new year off right. Here are our top four RRSP savings tips.


Tip 1: Make the Most of Your Refund

People often wrongly assume the tax refund they get from the government for contributing to their RRSP is “free money” and spend it. RRSPs don’t reduce, tax they’re defer it. You’ll have to pay the piper eventually when you retire and withdraw money from your RRSP. To get the most out of your RRSP, you should save this money. Getting a head start on your RRSP contributions next year, contribute to your Tax-Free Savings Account (TFSA), or paying down your mortgages are all great uses. (Using this money to pay for a trip to Cuba isn’t.)


Tip 2: Make Regular Contributions

Instead of waiting until the last minute to make RRSP contributions, make saving towards retirement painless by contributing throughout the year. Not only will you avoid the mad rush of contributing to your RRSP at the end of February, you’ll benefit from dollar cost averaging. Also, by contributing throughout the year, your investment risk is spread out. You won’t have to worry about buying at the high or the low of the markets.


Tip 3:An RRSP Doesn’t Make Sense For Everyone

There’s a preconceived notion that an RRSP is right for everyone. While an RRSP makes sense for a lot of Canadians, it’s not necessary right for everyone. The main purpose of an RRSP is to pay lower taxes in retirement. If your income will be higher in retirement, or you’ll be a low-income senior and qualify for means-tested benefits like Guaranteed Income Supplement (GIS), you’re probably better off avoiding the RRSP and contributing to your TFSA instead.


Tip 4: Know Your Investments

A lot of people mistake an RRSP for a type of investment. An RRSP is not an individual investment like a GIC or mutual fund. Your RRSP is a tax-sheltered account that can hold different types of investments ranging from savings accounts to ETFs and in between. If you want to see your money grow, it’s important to invest your money in something appropriate based on your time horizon. For example, if you’re planning to withdraw money under the Home Buyers’ Plan, you’re probably better off with something safe like a savings account. If you’re many years away from retirement, you’re probably better off investing more aggressively in a balanced fund.


These are just four of many RRSP savings tips. If you’re looking for ways to earn more money with your RRSP, feel free to contact our office. We can take a look at your RRSP for ways to make your retirement savings grow faster.