A Registered Retirement Savings Plan (RRSP) is a tax-advantaged investment account designed to help Canadians save for retirement. Contributions to an RRSP are tax-deductible, meaning the amount you contribute reduces your taxable income for the year.

Key Benefits of an RRSP

1. Tax-Deferred Growth
   Investments inside an RRSP grow tax-free until withdrawal. This allows your savings to compound more effectively over time.
2. Immediate Tax Relief
   Contributions reduce your taxable income, potentially lowering the amount of tax you owe in the current year.
3. Retirement Income
   RRSP funds can be withdrawn in retirement, often when you’re in a lower tax bracket, resulting in less tax owed on withdrawals.
4. Homebuyers’ Plan (HBP)
   First-time homebuyers can borrow up to $35,000 from their RRSPs tax-free to purchase a home, provided it is repaid within 15 years.

Contribution Limits and Deadlines

For 2025, the RRSP contribution limit is 18% of your earned income from the previous year, up to a maximum set by the Canada Revenue Agency (CRA). Unused contribution room carries forward indefinitely. The deadline for contributions that apply to the 2024 tax year is March 1, 2025.

Planning Ahead

RRSPs are an essential tool for long-term financial planning, offering tax advantages and a structured way to save for retirement. Consult a financial advisor to optimize your contributions and align your RRSP strategy with your financial goals.

By starting early and contributing consistently, you can maximize the benefits of your RRSP and secure a more comfortable retirement.