Pay down the mortgage or contribute to your RRSPs?

In a perfect and highly disciplined world, paying off your mortgage before contributing to your RRSPs may be the best thing to do. If the return on RRSPs is lower than the mortgage rate, it would be wiser to pay your debts quickly instead of making an RRSP contribution. But, after the last mortgage payment, you should keep putting $800 or $1000 per month aside for your retirement.

Realistically, it's almost impossible.

Another possibility is to make substantial contributions to your RRSP before buying a home. However, a home is more than a financial investment; it represents a better quality of life and it's a project that you don't want to put off for too long.

The RRSP that you started early could help make you a homeowner more quickly through the Home Buyer's Plan (HBP).

Most of the time, it is best to find a balance between paying your mortgage and contributing to your RRSPs. Why? Because the capital invested in your RRSP will produce compound interest in a tax shelter. In the long run, you'll have a substantial nest egg for your retirement. Furthermore, given the high debt rate, many people have nothing to fall back on in the event of illness or unemployment and an RRSP may serve as an emergency fund.