RRSP primer: Tax deferred is tax saved

How they work and how much you can contribute.

Matthew Elder 13 February, 2017 | 6:00PM

Editor's note: This week on Morningstar.ca, we present our Focus on RRSPs, where we go over what every investor needs to know about Canada's most popular savings program. Along with an explanation of RRSP basics, we will look at important issues such as whether it makes sense to defer savings, the life-cycle approach to retirement contributions, and ways to go beyond the traditional RRSP. Finally, our manager research analysts will present their favourite funds to hold in a retirement account. Check back all week for more insights from Morningstar's experts.


Having enough money during retirement is a worry for many Canadians, an ominous fact that surfaces every year at this time when banks and other interested parties conduct surveys on the subject. We're not putting away enough, we are warned, and the best way to save for our golden years is the RRSP. What's more, they remind us, the March 1 deadline for contributing to a registered retirement savings plan for the 2016 taxation year is drawing near.

These same institutions aggressively advertise a plethora of RRSP products at this time of year, behooving us to make important investment decisions before the annual deadline. In fact, the RRSP is a tax-savings umbrella under which you can hold investments ranging from cash to mutual funds to individual securities -- and even your home mortgage. And while the deadline is important in terms of the sum contributed being deductible on your 2016 tax return, if you can't afford to make the maximum contribution for the year by the end of this month you can "bank" the contribution room for future use.

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Matthew Elder

Matthew Elder  

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