RRSPs before 60: Not always a priority

Sometimes it's best to postpone contribution to a future year.

Matthew Elder 30 January, 2018 | 6:00PM

The registered retirement savings plan is Canadians' main vehicle for long-term savings. The power of the RRSP's tax deferral over many years emphasizes the importance of getting started early in your adult life.

However, Canadians often don't get serious about retirement savings until we're into our 40s. By this stage of life -- with a higher income and retirement age only two or three decades away -- the financial-planning rule of thumb is to make your maximum allowable contribution each year. This includes your unused contribution room as well as the additional amounts added each year to your cumulative limit. Basically, if you don't use it, you don't lose it -- until of course you reach age 71, when contributing to an RRSP becomes a thing of the past.

But there are strategies to consider during those prime contributing years up to around age 60, when retirement draws near and the RRSP may become less of an investment priority. Or, for that matter, you may be ready to begin drawing on your savings.

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Matthew Elder

Matthew Elder