- Maximize your RRSP contributions
Have you reached your RRSP contribution limit for this year? If you have contribution room left and your budget allows, contribute a little more to your retirement savings plan. The retiree you will one day be will be very grateful to you.
By contributing a little more, you improve your financial future and reduce your current tax bill. Also, know that your money grows tax-free until you withdraw it in your RRSP, which should happen when you retire and your tax rate is lower.
If you haven’t contributed to an RRSP this year (or if you don’t have an RRSP), now is the time to get started! Don’t wait for the March 1 deadline. The sooner you do this, the sooner your money will start growing.
How much can you contribute to an RRSP?
To find out if you’re saving enough in your RRSP, try this RRSP calculator.
RRSP: the five most common mistakes and how to avoid them
- Maximize your TFSA contributions
Since it’s all about making your money grow, know that the tax-free savings account (TFSA) is an option not to be overlooked. Since you contribute money that has already been taxed (unlike an RRSP), withdrawals are not taxable, nor are your investment gains. Plus, you can withdraw your money whenever you want, whatever reason you want. The TFSA is ideal for short-term goals (to finance a wedding, a down payment, renovations, an emergency fund, etc.) and longer-term plans (increase your savings- retirement, for example).
The TFSA allows you to carry over your unused contribution room to subsequent years. So no need to rush to use your rights for 2018 before the end of the year! But like any investment, the earlier you invest, the more your money will grow. So if you do not maximize your contributions this year, your unused room will be added to the contribution limit set for 2019.
If you don’t have a TFSA yet, you can open one whenever you want if you’re 18 or older. And if you open one this year and you were at least 18 years old in 2009 when the government created the TFSA, you can contribute up to $57,500. Not to mention that in January, new fees ($6,000) will be added for 2019.
