{"appState":{"pageLoadApiCallsStatus":true},"articleState":{"article":{"headers":{"creationTime":"2016-03-26T21:11:45+00:00","modifiedTime":"2018-10-30T17:17:10+00:00","timestamp":"2022-09-14T18:16:51+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Retirement","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34308"},"slug":"retirement","categoryId":34308}],"title":"RRSP Basics for Canadians","strippedTitle":"rrsp basics for canadians","slug":"rrsp-basics-for-canadians","canonicalUrl":"","seo":{"metaDescription":"For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also o","noIndex":0,"noFollow":0},"content":"<span lang=\"EN-CA\">For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also offers one of the best ways to reduce the amount of tax you pay.</span>\r\n<h2 id=\"tab1\" >The benefits of RRSPs</h2>\r\n<span lang=\"EN-CA\">When you open an RRSP, you’re making a deal with the government. By “registering” your retirement savings plan, you agree to put money away for your retirement and not spend it. In return, the government gives you two valuable benefits:</span>\r\n<ul>\r\n \t<li><strong>Money that you contribute to your RRSP is deductible from your taxable income. </strong>This means that any income you contribute to your savings plan is not taxed. Say you earn $50,000 a year, and contribute $5,000 to your RRSP. If you claimed that $5,000 as a deduction on your tax return, your income tax would be calculated as though you had made only $45,000 that year.</li>\r\n \t<li><strong>The government lets the savings in your RRSP grow tax free.</strong> Any profits you earn on investments inside your RRSP aren’t taxed until you close your plan and withdraw the funds. When interest and earnings on investments aren’t taxed, the full value of your gains is added to the original amount. This new, larger amount then earns further gains, which again are added to, or compounded with, your existing investments. This phenomenon is called <em>compound growth,</em> and over time it will lead to your retirement savings growing exponentially.</li>\r\n</ul>\r\n<h2 id=\"tab2\" >Maximizing your RRSP’s growth</h2>\r\nYou can maximize the growth of your RRSP in two simple steps:\r\n<ul>\r\n \t<li><strong>Begin contributing </strong><strong>as early as you can</strong><strong> — and are eligible to — in life.</strong> The longer you have money in an RRSP, the more time your savings have to compound. Even if you’re just 25 and you have only $1,000 to spare, put it in an RRSP! If you earn an average of 10 percent a year, you’ll have an extra $45,000 in your plan when you retire at 65.</li>\r\n \t<li><strong>Try to maximize your RRSP’s returns. </strong>Choosing appropriate investments is critical to maximizing the growth of your RRSP. And the more years you have before you have to collapse your plan, the larger the impact of boosting your returns by even just 1 percent or 2 percent.</li>\r\n</ul>","description":"<span lang=\"EN-CA\">For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also offers one of the best ways to reduce the amount of tax you pay.</span>\r\n<h2 id=\"tab1\" >The benefits of RRSPs</h2>\r\n<span lang=\"EN-CA\">When you open an RRSP, you’re making a deal with the government. By “registering” your retirement savings plan, you agree to put money away for your retirement and not spend it. In return, the government gives you two valuable benefits:</span>\r\n<ul>\r\n \t<li><strong>Money that you contribute to your RRSP is deductible from your taxable income. </strong>This means that any income you contribute to your savings plan is not taxed. Say you earn $50,000 a year, and contribute $5,000 to your RRSP. If you claimed that $5,000 as a deduction on your tax return, your income tax would be calculated as though you had made only $45,000 that year.</li>\r\n \t<li><strong>The government lets the savings in your RRSP grow tax free.</strong> Any profits you earn on investments inside your RRSP aren’t taxed until you close your plan and withdraw the funds. When interest and earnings on investments aren’t taxed, the full value of your gains is added to the original amount. This new, larger amount then earns further gains, which again are added to, or compounded with, your existing investments. This phenomenon is called <em>compound growth,</em> and over time it will lead to your retirement savings growing exponentially.</li>\r\n</ul>\r\n<h2 id=\"tab2\" >Maximizing your RRSP’s growth</h2>\r\nYou can maximize the growth of your RRSP in two simple steps:\r\n<ul>\r\n \t<li><strong>Begin contributing </strong><strong>as early as you can</strong><strong> — and are eligible to — in life.</strong> The longer you have money in an RRSP, the more time your savings have to compound. Even if you’re just 25 and you have only $1,000 to spare, put it in an RRSP! If you earn an average of 10 percent a year, you’ll have an extra $45,000 in your plan when you retire at 65.</li>\r\n \t<li><strong>Try to maximize your RRSP’s returns. </strong>Choosing appropriate investments is critical to maximizing the growth of your RRSP. And the more years you have before you have to collapse your plan, the larger the impact of boosting your returns by even just 1 percent or 2 percent.</li>\r\n</ul>","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34308,"title":"Retirement","slug":"retirement","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34308"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"The benefits of RRSPs","target":"#tab1"},{"label":"Maximizing your RRSP’s growth","target":"#tab2"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":288529,"title":"401(k)s and IRAs For Dummies Cheat Sheet","slug":"401ks-and-iras-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/288529"}},{"articleId":268853,"title":"How to Manage Your Pension","slug":"how-to-manage-your-pension","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268853"}},{"articleId":268848,"title":"How to Take Money Out of Your IRA","slug":"how-to-take-money-out-of-your-ira","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268848"}},{"articleId":268843,"title":"How to Manage Your IRA Contributions","slug":"how-to-manage-your-ira-contributions","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268843"}},{"articleId":268838,"title":"How to Get Online with Your IRA Provider","slug":"how-to-get-online-with-your-ira-provider","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268838"}}]},"hasRelatedBookFromSearch":true,"relatedBook":{"bookId":281850,"slug":"retirement-planning-for-dummies","isbn":"9781119627579","categoryList":["business-careers-money","personal-finance","retirement"],"amazon":{"default":"https://www.amazon.com/gp/product/1119627575/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119627575/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119627575-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119627575/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119627575/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://catalogimages.wiley.com/images/db/jimages/9781119627579.jpg","width":250,"height":350},"title":"Retirement Planning For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"\n <p><p><b>Matt Krantz</b> is a nationally known financial journalist who specializes in investing topics. He's personal finance and management editor at <i>Investor's Business Daily.</i> He's also worked in the financial industry and covered markets and investing for <i>USA TODAY.</i> His writing on financial topics has also appeared in <i>Money</i> magazine, <i> Kiplinger's</i>, and <i>Men's Health</i>. Krantz is the author of <i>Fundamental Analysis For Dummies</i> and co-author of <i>Investment Banking For Dummies.</i></p>","authors":[{"authorId":33279,"name":"Matthew Krantz","slug":"matthew-krantz","description":" <p><b>Matt Krantz</b> is a nationally known financial journalist who specializes in investing topics. He's personal finance and management editor at <i>Investor's Business Daily.</i> He's also worked in the financial industry and covered markets and investing for <i>USA TODAY.</i> His writing on financial topics has also appeared in <i>Money</i> magazine, <i> Kiplinger's</i>, and <i>Men's Health</i>. Krantz is the author of <i>Fundamental Analysis For Dummies</i> and co-author of <i>Investment Banking For Dummies.</i> ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33279"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/281850"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{"key":"cat","values":["business-careers-money","personal-finance","retirement"]},{"key":"isbn","values":[null]}]\" id=\"du-slot-63221a939b79d\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{"key":"cat","values":["business-careers-money","personal-finance","retirement"]},{"key":"isbn","values":[null]}]\" 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Basics for Canadians
For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also offers one of the best ways to reduce the amount of tax you pay.
The benefits of RRSPs
When you open an RRSP, you’re making a deal with the government. By “registering” your retirement savings plan, you agree to put money away for your retirement and not spend it. In return, the government gives you two valuable benefits:
- Money that you contribute to your RRSP is deductible from your taxable income. This means that any income you contribute to your savings plan is not taxed. Say you earn $50,000 a year, and contribute $5,000 to your RRSP. If you claimed that $5,000 as a deduction on your tax return, your income tax would be calculated as though you had made only $45,000 that year.
- The government lets the savings in your RRSP grow tax free. Any profits you earn on investments inside your RRSP aren’t taxed until you close your plan and withdraw the funds. When interest and earnings on investments aren’t taxed, the full value of your gains is added to the original amount. This new, larger amount then earns further gains, which again are added to, or compounded with, your existing investments. This phenomenon is called compound growth, and over time it will lead to your retirement savings growing exponentially.
Maximizing your RRSP’s growth
You can maximize the growth of your RRSP in two simple steps:
- Begin contributing as early as you can — and are eligible to — in life. The longer you have money in an RRSP, the more time your savings have to compound. Even if you’re just 25 and you have only $1,000 to spare, put it in an RRSP! If you earn an average of 10 percent a year, you’ll have an extra $45,000 in your plan when you retire at 65.
- Try to maximize your RRSP’s returns. Choosing appropriate investments is critical to maximizing the growth of your RRSP. And the more years you have before you have to collapse your plan, the larger the impact of boosting your returns by even just 1 percent or 2 percent.
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