A new survey from Edward Jones shows just over half of Canadians plan to make a registered retirement savings plan contribution before the March 1 deadline.
A new survey from Edward Jones shows just over half of Canadians plan to make a registered retirement savings plan contribution before the March 1 deadline.
It has also become a primary source of myths and misunderstandings as the finance industry jockeys for the billions of dollars in RRSP savings.Wrong. You only need to make your contribution before March 1 if you want to deduct it from your 2022 taxable income. You can contribute any time and claim it in future years.Wrong. You can park it in cash before the deadline, claim it on your 2022 tax return, and decide how to invest it whenever you want.
Contributors might be disappointed to learn RRSPs only provide an investment advantage if the refund is reinvested and those tax savings can compound over time.According to that same Edward Jones survey, 23 per cent of those contributing this year are making the maximum allowable contribution; 18 per cent of their previous year’s income to a maximum of $27,230.
One poignant example comes from last year’s massive hike in borrowing rates. There are no RRSP investments that could guarantee returns even close to the double-digit interest rates on consumer and student loans, lines of credit, or credit card balances - even after you factor in the tax savings. If you’re one of the many Canadians struggling with a high level of debt, pay it down.
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