Why You Should Stop Contributing to Your Personal RRSP

Many people rush into making a RRSP contribution during the "first 60 day" window each year in hopes of getting a refund on their taxes or avoid owing the government money.  I was recently interviewed for a Globe and Mail article and mentioned a few of the items below.  There's a big marketing push to have people make deposits and even make loans to do so.  However, is making a personal RRSP the right move.  Here are a few things to consider:

• ·Are you properly using your workplace plan throughout the year?
• Maximize your RRSP employer matching contributions from work first
• Applying a bonus directly to a RRSP from your employer
• Are you improperly prioritizing a RRSP contribution OVER debt or other financial needs.
• Pay down debt vs making a contribution.
• If a RRSP loan is needed, why? And considering the repayment timeline, is it worth the cost?
• Is cashflow better served elsewhere? Setting an emergency fund? Other accounts or products?
• ·Are you OVER SAVING in your RRSP?
• Are you on a defined benefit pension plan? 
• OAS “claw back”, GIS if low income.  You may be losing out on government income
• Your projected retirement income is estimated to be higher than current/past employment income.
• Estate taxes upon death
• ·Do alternative accounts with other benefits make more sense?
• If you don’t own a home, the First Home Savings Account should be your new number one option.
• Will not apply when filing your 2023 tax return since it doesn’t have the first 60 days contribution benefit.
• A Registered Education Savings plan can offer government grants AND be more attractive to lower income individuals who can receive additional grant enhancements.
• Tax Free Savings Accounts offer greater accessibility to your money and tax-free gains.
• Registered Disability Savings Plans for those who qualify, will receive better value from deposits through grants and other government support.

Many people manage their finances from a transactional perspective, opening an account, making a deposit, purchasing a product, but it's usually not the most effective way to approach your finances.  Speaking with a professional can really help save thousands of dollars that would have been lost otherwise.  Tax planning, costs savings, product comparisons are just a few things we can help with.