RRSP & Retirement Planning
Maximize your retirement savings with strategic RRSP contributions, TFSA planning, and pension optimization.
2024 Contribution Limits
RRSP Limit
$31,560
or 18% of 2023 income
TFSA Room
$7,000
Total lifetime: $95,000
FHSA Limit
$8,000
Lifetime max: $40,000
RRSP Deep Dive
How RRSP Tax Savings Work
Example: $10,000 Contribution
Income: $80,000Marginal rate: 31.48%
RRSP contribution:$10,000
Tax refund:$3,148
Net cost:$6,852
RRSP Benefits
- • Tax deduction at marginal rate
- • Tax-deferred growth
- • Income splitting in retirement
- • Creditor protection (in most provinces)
- • Home Buyers' Plan access
- • Lifelong Learning Plan
Important Deadlines
- • Contribution deadline: First 60 days of year
- • 2023 tax year: March 1, 2024
- • Must convert to RRIF by age 71
- • Spousal RRSP 3-year attribution rule
- • Unused room carries forward indefinitely
TFSA vs RRSP Comparison
| Feature | RRSP | TFSA |
|---|---|---|
| Tax deduction | ✓ Yes | ✗ No |
| Tax on withdrawal | Fully taxable | Tax-free |
| Contribution room | 18% of income | $7,000 (2024) |
| Age limit | 71 years | None |
| Re-contribution | Room lost | Next year |
| Income tested benefits | Affects OAS/GIS | No impact |
When to Choose Each
Choose RRSP when:
- • Current tax rate > retirement tax rate
- • Income over $50,000
- • Want immediate tax savings
- • Planning to buy first home
Choose TFSA when:
- • Current tax rate ≤ retirement tax rate
- • Income under $50,000
- • Need flexibility
- • Saving for short-term goals
First Home Savings Account (FHSA)
Best of both worlds: RRSP deduction + TFSA tax-free withdrawal
New in 2023, the FHSA combines the benefits of both RRSP and TFSA for first-time home buyers.
Key Features
- • $8,000 annual limit
- • $40,000 lifetime limit
- • Tax deductible contributions
- • Tax-free withdrawals for home purchase
- • 15-year maximum participation
- • Unused room carries forward ($8,000 max)
Eligibility
- • 18+ years old
- • Canadian resident
- • First-time home buyer
- • Haven't owned home in current + 4 prior years
- • Can combine with HBP
Retirement Income Sources
Government Benefits
CPP/QPP (2024)
- • Maximum: $1,364.60/month at 65
- • Average: ~$758/month
- • Can start 60-70 (reduced/increased)
- • Survivor benefits available
OAS (2024)
- • Maximum: $713.34/month at 65
- • Clawback starts: $86,912 income
- • Full clawback: $142,428
- • GIS for low-income seniors
RRIF Minimum Withdrawals
| Age | Min % | Age | Min % | Age | Min % |
|---|---|---|---|---|---|
| 71 | 5.28% | 75 | 5.82% | 80 | 6.82% |
| 72 | 5.40% | 76 | 5.98% | 85 | 8.51% |
| 73 | 5.53% | 77 | 6.17% | 90 | 11.92% |
| 74 | 5.67% | 78 | 6.36% | 95+ | 20.00% |
Advanced Strategies
Income Splitting
- • Spousal RRSP contributions
- • Pension income splitting (up to 50%)
- • CPP sharing between spouses
- • TFSA gifts to lower-income spouse
- • Prescribed rate loans (currently 5%)
Tax Optimization
- • Delay OAS to avoid clawback
- • Strategic RRSP/RRIF withdrawals
- • Realize capital gains gradually
- • Maximize dividend tax credits
- • Use TFSA for investment growth
Early Retirement Considerations
Planning to retire before 65? Consider these factors:
- • Bridge financing until government benefits start
- • Healthcare coverage gap before 65
- • CPP/QPP reduction for early start (0.6% per month before 65)
- • Tax-efficient withdrawal sequencing
- • Part-time work impact on benefits
Create Your Personalized Retirement Plan
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