Use your RRSP for short- and medium-term project

Your RRSP isn't just for your retirement dreams

Still years from retirement? Why not consider the Registered Retirement Savings Plan (RRSP) as a short-term financial tool? The RRSP is a lifelong financial ally that will help you make your dreams a reality.

What's an RRSP?

In Canada, the higher your taxable income, the more taxes you pay (i.e the graduated tax rate). The RRSP is a savings method that allows you to put money aside tax-free for the short-term. You only pay taxes on the money you withdraw from your RRSP at retirement. At that time, both your income and tax rate will likely be lower.

What are its advantages?

• Your contributions are deducted from your taxable income.
• Your savings and investment income grow tax-free.
• Allows you to make your retirement projects or any other short- and medium-term project a reality.

Why contribute early?

The earlier you start contributing to your RRSP, the longer your money can grow tax-free. This makes the funds available at retirement or for your projects very significant!

Who can contribute?

You start earning RRSP contribution room with your first tax return. Anyone can contribute to an RRSP, as long as they have unused contribution room or have earned income in Canada over the previous year. There's no minimum age and you can contribute up to 18% of your annual income every year.

The advantage of automatic withdrawals

You determine the amount and frequency of your contributions: every week, every 2 weeks or every month. It's that easy! This allows you to budget your RRSP contributions.

Use your RRSP to:

Travel or make a dream come true	By contributing to your RRSP, you are gradually saving, while benefiting from tax savings. You can use your tax refund to spoil yourself a little.
Go back to school	Want to go back to school full-time? You can! Thanks to the Lifelong Learning Plan (LLP), you can withdraw a non-taxable amount (maximum of $20,000) from your RRSP to pay for your studies.
Take some time off	You've been dreaming of taking some time off for a while? Why not use part of your RRSP to do just that and carry out one of your projects?1
Buy a home	The Home Buyer's Plan (HBP) lets you use up to $25,000 ($20,000 before January 28, 2009), tax-free, of your RRSP as a downpayment towards the purchase of your primary residence. You then have 15 years to reimburse the amount withdrawn.

If you don't have an RRSP or if the one you have is insufficient, an RRSP loan (with an interest rate lower than that of a personal loan) will let you achieve your dream faster.

1. Keep in mind that the amount withdrawn from your RRSPs is added to your gross income of the year and is therefore taxable.