Q: How much should I contribute to my RRSP?
Figuring out how much to contribute to your RRSP is important. If you do it right, you can maximize your tax savings now, while setting yourself up for income after retirement. There’s a limit to how much you can contribute to your RRSP and it changes annually. For the 2020 tax year, you can contribute up to 18% of the earned income you reported for the previous year’s taxes (2019 tax filing), or $27,230— whichever is less. The 2021 limit is $27,830. Contributing to your RRSP before the deadline of March 1, 2021, can have a material impact on your tax return. By reducing your net income on the tax return, RRSP contributions effectively put you in a lower tax bracket. However, RRSP contributions may or may not be appropriate for your particular situation. I would be happy to discuss with you how to best utilize your RRSP this year.
Tanya Wilson, BBA, CFP, FCSI, CIM
Portfolio Manager & Certified Financial Advisor