Skip Next Year’s RRSP Stress with This 4-Step Plan

Skip Next Year’s RRSP Stress with This 4-Step Plan

March 1st is the deadline for your 2020 Registered Retirement Savings Plan (RRSP) contributions. Like many Canadians, you may be scrambling to get it all done at the last minute. Here are four steps to make the most of your effort with some advance planning for next year. Make this the last time you have to be so stressed during RRSP season.

Commit to Your Future
Check your Notice of Assessment from last year. Was the amount you contributed enough to result in zero taxes still owed on your T4? Can you commit to the same savings level for next year?

Also, consider your retirement plans. Estimate how much time you have left to save, how much you want to have by retirement, and what you need to contribute yearly to achieve your goal. Your Financial Advisor can help with this.

Manage It Simply
Take these calculations, divide into 12, and there’s your monthly contribution. Would it not be easier to put away, for example, $650 a month instead of trying to find $7,800 by March of next year?

You can further divide this into paycheques and have it automatically transferred into your RRSP account each payday. This is the best way to guarantee you’ll follow through on your goal.

You don’t have to make the decision to contribute each month. You’ll never forget, and you’ll soon learn to budget your expenses without even considering the money you’ve socked away.

Be Sure to Be Precise
It’s one thing to support your RRSP savings goal by being proactive. But if you over-pay, you will face a penalty.

You can contribute up to 18% of your previous year’s income. The maximum limit for 2020 is $27,830. Add in any contribution room left over from previous years. You can check the exact amounts with your latest Notice of Assessment, or by visiting the Canada Revenue Agency My Account section.

Compound the Goodness
An automatic saving strategy like this can bring you peace of mind. In addition, the compounded interest from monthly contributions will grow your nest egg faster than with annual deposits.

Another benefit of all this planning is ample time to formulate a carefully planned RRSP investment strategy. Save now to enhance your future retirement. Your Financial Advisor will help you to develop an RRSP saving and investment plan that’s perfect for you.

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