Choose your settings
Choose your language

RRSPs: How to make up for lost time

August 24, 2023

Behind on your Registered Retirement Savings Plan (RRSP) contributions and starting to panic? Get hit with some unexpected expenses or eased off on your financial planning? No need to fret; it may not be too late to catch up on RRSP contributions and save more for retirement.

No matter how close to retirement you are or what stage of planning you’re at, there are solutions to boost your retirement savings so you can maintain your lifestyle and keep doing the things you love.

Dealing with setbacks

Don’t worry, you’re not alone! Anyone can experience a financial setback that impacts how quickly they’re able to build retirement savings. Maybe a storm hits and damages your roof, you have to take a leave of absence from work or something else throws off your budget—whatever it is, it can happen to anyone and make it hard to maintain your retirement savings momentum.

No matter your situation, it’s always a good time to update your retirement plan, based on your current and future needs. Now, at the start of a new year, your advisor can help you review how fast you’re saving and maximize your RRSP contributions by taking advantage of unused contribution room, so you can achieve your retirement dream.

Here are 2 good ways to quickly boost your RRSP contributions so you can achieve your retirement objectives.

Become a savings pro

It’s a good idea to maintain the savings habit, even in the final push before retirement. Here are some tips to help you become a savings ninja and take advantage of unused RRSP contribution room.

  • Review your current financial situation by making a few adjustments to your budget so you can boost your ability to save and catch up on any RRSP contributions.
  • Try to save regularly or, if you’re already in the savings habit, increase the amount if possible. To develop the discipline to save, set a time-based goal. Of course, you can also set up automatic transfers, an easy, convenient way to save without having to think about it.
  • Boost your retirement savings with the tax refund you get from contributing to your RRSP.
  • Consider setting up a tax-free savings account (TFSA), an investment vehicle that makes it easy to build tax-free savings. It’s the ideal complement to an RRSP. Your advisor can recommend the perfect RRSP/TFSA combination based on your situation and goals.

Mortgage about to be paid off?

Why not take the amount of your mortgage payment and put it in your RRSP so you can reach your savings goals even sooner?

Borrow to save

Maybe saving doesn’t come naturally to you and you haven’t been able to contribute as much to your RRSP as you’d like. You’re not alone, and if your finances are in order, an RRSP loan gives you more room to build your retirement savings. Of course, for this option to be worth it, the real cost of the loan must be offset by your tax savings and the investment income that accumulates tax-free.*

Here are some tips to make sure an RRSP loan is right for you:

  • Use the total amount borrowed to boost your annual RRSP contribution.
  • Take the tax refund you should get and apply it directly to your loan to pay it off as soon as possible.
  • Pay off the loan within a year so you can maintain the financial leeway needed to keep contributing every year.
  • Make sure you borrow only as much as you can quickly pay back while staying within your budget and respecting your borrowing capacity.

What are your goals for the new year?

How about getting the year off to a good start by taking some time to plan your savings and RRSP contributions? Make it more pleasant by playing some favourite music while enjoying a nice cup of coffee or a glass of wine. If ever you need help, don’t hesitate to reach out to your advisor—that’s what they’re there for!

* Borrowing to invest is leveraging. The risk associated with using borrowed money to buy securities is higher than when using your own cash. If you borrow to buy securities, you’re required to pay back what you’ve borrowed plus the interest stipulated in the terms of the loan even if the securities you bought drop in value. Talk to your mutual fund representative for more information about leveraging.