Innovative Ways to Make Your RRSP Work for You

Retirement savings in Canada are easy thanks to multiple, self-directed savings plans that offer significant tax advantages. Through a simple RRSP, you can make tax deductible contributions to a savings plan. By contributing to the plan, you save money on your taxes and can enjoy a bigger return from the government. When it comes time to withdraw money from your retirement plan, the idea is that you will be earning in a lower income bracket and therefore on the hook for a lower tax bill than if you paid those taxes throughout your working life.

Customizable RRSPs – Buy the Investments Right for You

You can use an RRSP to buy shares, bonds, mutual funds, and many common investment vehicles. In more recent years, the list of investment products that are now RRSP-eligible has grown to include gold bullion – great news for investors who want additional security and an insurance policy for their savings, without having to give up the tax advantages of an RRSP. 

When you buy bullion in Canada, you can now buy RRSP gold by going through the right sellers. Not only are you setting money aside into an investment that’s reliable, you’re also reducing your taxable income for the year and getting a better return. If the key to successful gold investing is reducing your costs, RRSP gold is the only way to go.

Flexible RRSPs – Funding Your First Home or Education

Initially designed to help Canadians save for their retirement, RRSPs have also become the single most popular way for Canadians to save from day one. 

Recognizing that retirement isn’t the only savings goal many might have, the Canadian government has made RRSPs more flexible. You can draw up to $25,000 from your RRSP to put towards a down payment on your first home. It’s a system of borrowing from yourself, and as long as you pay it back into your RRSP, you won’t have to pay the taxes on RRSP income.

The biggest downside is the cap: $25,000 (or $50,000 if you combine it with a spouse’s contributions) isn’t much when you need a 20% down payment in today’s real estate market.

Convert RRSPs into an Annuity when You Retire

Another great feature of your RRSP is that you can easily convert it into annual income. When you retire, you can turn it into an RRIF (Registered Retirement Income Fund) to provide you with regular payments each year, receiving it in a lower tax bracket thanks to your reduced income. It’s an effective way to reduce the tax burden on money you worked hard to earn throughout your life.

Your RRSP is the most valuable tool you have for savings as a Canadian, but there is a lot it can do for you. Explore all of your options with an RRSP before you make your next contribution, including diversifying your savings with RRSP gold, and alternative ways to use your savings long before you retire, such as the First Time Homebuyers’ program.