Let the government contribute to your TFSA so you can get more money working for you. Many people really like the flexibility you have in the TFSA. As many of the experts above have pointed out, this may be ideal when you are younger and just starting out or in a lower tax bracket. If you are not very disciplined, sometimes putting money into RRSPs help prevent you from taking it out in the future.
All financial planning is personal. Currently, Jim specializes in putting Financial Education programs into the workplace. They are both great financial accounts so the ideal strategy is to have both. RRSP better if the lifespan is longer. Yes, if you are just starting out, do both to the max. And if you started young enough and you earn that six figure salary so you can truely put the max in then there may come a time when it is not that wise to keep building your RRSP for the simple reason that it is taxable income when withdrawn.
In those cases you may want to consider a non-registered account paying dividends that are taxed at a lesser rate that withdrawals from a RIF.
Different strokes for different folks and especially for different portfolio values. The more important question, which is rarely addressed in these stories… is what to do with the money once it has been contributed to either of these accounts.
People are discouraged when the money in registered accounts is not growing. That should offer a decent guideline and take into account pension plans. Those jobs have estimated income that are accessible schools have it to show students and income relationship. Time and time again, I realize most people cannot do the math and forecasting so they need it spelled out according to their life situation.
The only way I can think of is to use the job category to show the best optimal path because it defines the income. Even if 40 years down the road you are still at the same tax bracket I doubt it you still used 40 years worth of tax money to pay yourself in a TFSA. Trouble is where are we going to vacation LOL. I consider my level of financial acumen to be low so please forgive my naivety or compete lack of insight here.
I am retired, age 69, but would like to,advise my sons so please point outs any flaws in my thinking. I did some rough calculations based on. And pension plans, depending on what company you work for, have evolved — putting more pressure on you to save for retirement on your own. In most cases, you are better off seeking the benefits of the tax reduction with the RRSP now and paying it later. But the challenge is you don't know what your income tax rate will be in the future and you don't know what government tax rates will be overall.
In other words, if you expect to have a higher tax rate at retirement, maximizing your TFSA first may be the better option. The contribution on the TFSA accumulates annually. Treat the TFSA like a long-term investment vehicle where you can benefit from tax-free dividends and gains.
Make the first sixty days of the last time you make a lumpsum contribution to your RRSP as a last-minute effort to bring down your taxes.
Putting money aside for your savings or investment, such as your RRSP, is paying yourself first. Based on your budget, designate a certain amount of your pay cheque to your RRSP. To make it easier, you can set up a recurring transfer from your chequing to your RRSP.
The only caveat is to ensure that all your contributions do not exceed your RRSP contribution limit. Depending on your use of the TFSA, you may look at shorter term investments. It's important to note that our editorial content will never be impacted by these links.
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Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected] , where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor. Good discussion, but I have issues with 5.
I want to get ahead in my savings for my retirement as well as savings for a house for the future. Should I do both? There should be a section on which is best when you pay into a pension plan through work and expect to receive a pension upon retirement. This is a decent guide, but things are unfortunately a bit more complicated than this.
For many people, the TFSA is the better option, even in some situations where it says otherwise in this guide. For example, in 2, it may very well be to your advantage to invest for retirement in a TFSA if you have a long time horizon. But in an RRSP it would be. And because it counts as income, it lowers your eligibility for things like the Guaranteed Income Supplement.
I have maintained for years now that the RRSP is the biggest scam going. Need help getting started? An advisor can help put together a solid plan that suits your financial goals and needs. Are you a Sun Life Client? Do you have an RRSP through your employee benefits? Log into mysunlife. Log in or register today.
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