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The above article explains what an RRSP is and how it works. A Registered Retirement Savings Plan (RRSP) is a specialized savings account designed for retirement in Canada. It provides tax advantages to individuals, their spouses, or common-law partners who contribute to it. When you make deductible contributions to the RRSP, it lowers your taxable income, offering a potential tax benefit. Within the RRSP, any income earned on your investments is not taxed until you decide to withdraw the funds. At the time of withdrawal, regular income taxes are typically applied. In essence, the RRSP encourages individuals to save for retirement by providing tax incentives for contributions and deferring taxes on investment earnings until retirement.

The reason why I chose this website is because it is Canada's official website. Hence there is barely any chance that there is misinformation or false claims.

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Contributing to an RRSP in 2022-2023 is crucial for retirement savings. Canadians, are now actively preparing for retirement, with 47% knowing how much they need to save. RRSP contributions also offer a chance to reduce taxable income by deducting the contribution amount. Maximizing the RRSP contribution limit for 2022 (up to $29,210) and 2023 ($30,780) enhances potential tax deferral benefits. Starting early takes advantage of compound growth within the RRSP, while a Spousal RRSP can be strategically used for tax efficiency in cases of income disparity between partners. In summary, RRSP contributions serve as a comprehensive strategy for retirement planning, tax reduction, and maximizing financial benefits.

The reason why I chose this particular article is because of the timeframe mentioned (2022-2023), the information is timely and aligns with current financial planning considerations. The information is also sourced from a reputable financial institution, TD Direct Investing, and hence the credibility. The article doesn't just highlight the importance of RRSP contributions but also provides practical tips and considerations

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Contributing to a Registered Retirement Savings Plan (RRSP) in 2022-2023 may be more important than ever. Here are 5 reasons to consider.

1. Save for retirement with RRSP contributions

Whether your RRSP contribution will be large or small this year, it may be more important than ever to ascertain what retirement savings you will need and how you will fund a comfortable retirement.

Many Canadians may not have saved enough money to fund their retirement. This year, a part of staying safe may include staying financially safe. Evaluating your plan to save for retirement and determining how much you can contribute to your retirement savings can help you in the future. You can make an RRSP contribution for the 2022 taxation year by the RRSP contribution deadline, March 1 st, 2023.

A Government of Canada study "Canadians and their Money: Key Findings from the 2019 Canadian Financial Capability Survey" ¹ indicates that 69% of Canadians are preparing financially for retirement.

The study indicates that anxiety regarding retirement savings is focused among Canadians who may be likely to depend on public benefits such as the Canada Pension Plan, Québec Pension Plan or Old Age Security.

The study states that 47% of Canadians say they know how much they will need to save.

1. As stated in the study, the individuals who have their own retirement savings plans are confident that their savings will provide the standard of living they hope for in retirement.

2. The study indicates that Canadians who have not yet made a plan to save for their retirement may be anxious about possibly not having adequate savings to live on later in life. Having a plan to make RRSP contributions could help to build confidence about the future.

How much will you need to retire comfortably?

Without knowing how long retirement will last, planning how much to save may seem like guesswork. However, being realistic about the spending habits you expect to have can be helpful in defining your retirement portfolio's size.

There are different schools of thought regarding how much money you may need for retirement - as well as how to arrive at the percentage or dollar amount that you may require.

Savvynewcanadians.com indicates that to determine an actual required figure, you can multiply the yearly retirement expenses you expect to need x 25.

However, while newswire.ca reports that retirees could expect to spend approximately 70%-80% of their pre-retirement budget, Human Resources Director magazine (hcamag.com) suggests that Canadian employees may need 11 times their final pay to retain their pre-retirement standard of living when they retire.

The long and the short of determining how much retirement savings you will need will depend on each individual's circumstances and requires planning.

2. Consider using RRSP contributions to help reduce your taxable income

Making an RRSP contribution can potentially reduce the amount of tax you will be subject to pay on your income tax return.

1. The way an RRSP works is that it helps you save for the future while deferring tax. The amount you contribute to your RRSP is deducted from your taxable income in the year of the contribution. By the end of the year in which you turn 71, your RRSP must either be transferred to a Registered Retirement Income Fund (RRIF) or a Life Annuity, or be withdrawn in cash. A RRIF is designed to provide you with retirement income.

2. In retirement, your other sources of income may potentially be lower than they were in the years you were funding your RRSP, and amounts withdrawn from the RRIF may, therefore, be subject to a relatively lower tax rate.

Did you know that the funds in RRSPs can be invested? After you've contributed to your RRSP account, you are able to invest the funds into a variety of financial products such as Guaranteed Investment Certificates (GICs), mutual funds, stocks and bonds (depending on the type of RRSP) to potentially grow the money that you've contributed. Since it's a tax-deferred account, taxes will be payable once you withdraw funds from the account. However, it is important to keep in mind that:

1. An RRSP withdrawal (except for a withdrawal under the RSP Home Buyers' Plan or the Lifelong Learning Plan), will be reduced by withholding tax.

2. The amount of withholding tax varies depending on the amount withdrawn and your place of residence. The withdrawn amount will be considered taxable income in the year withdrawn.

3. An RRSP withdrawal (except for a withdrawal under the RSP Home Buyers' Plan or the Lifelong Learning Plan) cannot be recontributed to your RRSP; the amount withdrawn is not added to contribution room for future years.

3. Take advantage of the RRSP contribution limit

The RRSP contribution limit for 2022 is 18% of your 2021 "earned income" - up to a maximum of $29,210, subject to any pension adjustment. The maximum for 2023 is $30,780.

You may want to consider maximizing the contributions within your RRSP contribution limit. The earlier you contribute and the more you contribute within your limit, the higher the potential benefits of tax deferral on income earned in the RRSP will be.

If you are beginning to plan to save for retirement, other considerations you may want to assess or keep in mind can include your tolerance for risk, your time horizon, retirement expenses and returns after-tax that you may require and inflation.

As you continue to save for your retirement, you may want to evaluate your retirement savings plan periodically as this will help ensure that you are still on track, providing the opportunity to rebalance your portfolio and make changes if needed.

4. Harness the power of compounding on your RRSP investments

Starting to save for retirement at a younger age can help you take advantage of compound growth within an RRSP.

Although it's never too late to start saving for retirement, there are advantages to starting to contribute to your RRSP early. Compound growth occurs when income is earned not only on the funds you contribute to your RRSP, but also on the reinvested income from those original contributions.

5. Reduce your family's tax burden with a spousal RRSP

A Spousal RRSP allows you to contribute money to your spouse or common-law partner's RRSP, up to your personal contribution limit. When a contribution is made to the spousal RSP, the contributor receives a tax deduction.

The difference between a personal RRSP and a spousal RRSP is that, with a spousal RRSP, one spouse is the annuitant (the plan holder or owner of the RRSP), while the other spouse (or common-law partner) is the contributor to the plan.

A Spousal RRSP can be helpful when there is a large difference in incomes between partners. Let's say you're the one with higher income. You contribute to a Spousal RRSP and end up using some of your contribution room in the process. However, in retirement, your spouse withdraws from it. This can be a way to efficiently defer taxes in the current year as well as benefit from withdrawals, which will be taxed based on the marginal tax rate of the lower-income earner.

Making regular RRSP contributions could help you save for retirement. For more details on RRSPs, check out " What is an RRSP and how it works".

What is an RRSP and what's different about a self-directed RRSP? Discover how investing in a self-directed RRSP may help you save for retirement and defer tax as you manage multiple investments.

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5 Reasons to Consider Making an RRSP Contribution in 2021-2022

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Many Canadians may not have saved enough for retirement. Here are 5 reasons why making an RRSP contribution in 2022-23 may be more important than ever.

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The article provides an overview of mortgages, defining them as agreements between borrowers and lenders, granting lenders the right to seize property if repayments aren't made. It emphasizes using mortgage loans for home purchases or leveraging existing home values. The article lists seven key considerations when selecting a mortgage, including loan size, interest rate, closing costs, Annual Percentage Rate (APR), type of interest rate, loan term, and potential risky features. It advises prioritizing affordability over qualification, urging readers to assess their income, expenses, and savings priorities. Additionally, it highlights the importance of factoring in additional costs like insurance and taxes when calculating monthly payments for a realistic budget.

The article's emphasis on considering additional costs, like insurance and taxes, enhances its practicality. Overall, the article is chosen for its informative content, accessibility, and relevance to individuals seeking guidance on mortgage-related decisions.

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Mortgage loans are used to buy a home or to borrow money against the value of a home you already own.
Seven things to look for in a mortgage

The size of the loan

The interest rate and any associated points

The closing costs of the loan, including the lender's fees

The Annual Percentage Rate (APR)

The type of interest rate and whether it can change (is it fixed or adjustable?)

The loan term, or how long you have to repay the loan

Whether the loan has other risky features, such as a pre-payment penalty, a balloon clause, an interest-only feature, or negative amortization

Focus on a mortgage that is affordable for you given your other priorities, not on how much you qualify for.
Lenders will tell you how much you are qualified to borrow - that is, how much they are willing to lend you. Several online calculators will compare your income and debts and come up with similar answers. But how much you could borrow is very different from how much you can afford to repay without stretching your budget for other important items too thin. Lenders do not take into account all your family and financial circumstances. To know how much you can afford to repay, you'll need to take a hard look at your family's income, expenses and savings priorities to see what fits comfortably within your budget.
Don't forget other costs when coming up with your ideal payment.
Costs such as homeowner's insurance, property taxes, and private mortgage insurance are typically added to your monthly mortgage payment, so be sure to include these costs when calculating how much you can afford. You can get estimates from your local tax assessor, insurance agent and lender. Knowing how much you can comfortably pay each month will also help you estimate a reasonable price range for your new home.

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What is a mortgage? | Consumer Financial Protection Bureau

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A mortgage is an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you've borrowed plus interest.

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The article explores the debate between experts on paying down a mortgage or investing in RRSP, given current low mortgage rates.

Three key questions guide the decision:

1) Financial Discipline: Disciplined savers may benefit from addressing the mortgage first, while those less disciplined might find RRSPs more suitable.

2) Risk Tolerance: Prioritizing mortgage repayment is advisable if debt causes anxiety, while contributing to RRSPs may suit those fearing an insecure retirement. 3) Mathematics: If the mortgage interest rate is 3% higher than the average annual return from the retirement portfolio, debt repayment is recommended. The approach encourages considering financial habits, anxieties, and mathematical assessments for informed decisions.

The article is chosen because it gives practical and relevant guidance for people dealing with this common financial choice.

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Low interest rates and returns are prompting one of the longest running debates in personal finance

Ask three experts whether you should pay down your mortgage or invest in your retirement and you'll end up with at least four different answers. That's because over the years experts have consistently disagreed on what the best strategy is for your financial well being. And these days it's a particularly hard question to answer.

With the average discounted mortgage rate hovering around 2.7%, you'd think prioritizing your RRSPs over your mortgage was a no brainer, right?

Not necessarily. If the historical rate of return of 10% applied to today's market then the dilemma would be solved. But five years ago everything changed. Now, planners are suggesting that the best possible return for a well diversified, balanced portfolio (typically 60% equities and 40% fixed income) is 6% before inflation. That's 4% after inflation. What's more, planners believe that this return won't change much for the next 10 or so years.

Despite all this ambiguity you can still figure out what's best when it comes to the mortgage vs. RRSP debate by answering three simple questions:
1) How disciplined are you?
I'm not talking about whether you can resist the last cookie in the package, or stop yourself from going for seconds at the buffet. The real question is whether you are disciplined saver.

If, for instance, you paid off your student loans and then used that surplus of cash to invest in your retirement, or to save for a down payment on a home, then you, my friend, are a disciplined saver. You would benefit from paying off your mortgage first.

If, however, you bought a car and went on a vacation once you had a bit of extra cash then paying off your mortgage-a non-deductible debt-would not be prudent.
2) Are you a nervous Nellie?
Ask yourself: what keeps me up at night? And be honest. If it's the idea of debt, then pay down your mortgage first. If you lose sleep at the thought of poverty in your golden years, then contribute to your RRSP first.
3) Have you done your math?
Just before his book, "Financial Freedom Without Sacrifice," was released, I spoke to financial author and educator Talbot Stevens. According to Stevens the math behind this age-old question is quite simple:

If your interest rate on your mortgage debt is 3% higher than the average annual return from your retirement portfolio then ignore your RRSP and pay down your debts.

Keep in mind, though, that the average annual rate of return for a balanced portfolio is 4% after inflation-that's only a percentage point and a bit more than most mortgage rates these days.

Still, Stevens suggests that every investor should prioritize their debts. Pay off high-interest rate credit cards first, then move to loans and lines of credit, then your lower-interest rate mortgage.

By answering these three questions you can quickly determine whether paying off your mortgage is the right move for you, or if you should be investing in your retirement fund. If you're still in doubt try a mortgage vs. RRSP calculator such as this one by Empire Life or the province-specific TaxTips.ca calculator, or the Growth Works calculator that lets you add extra inputs.

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Pay off the mortgage or invest in an RRSP?

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Low interest rates and single-digit market returns are prompting one of the longest running debates in personal finance.

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This video explains that RRSP is Registered retirement savings plan. It explains how RRSP is an Investment account just like TFSA, cash account. They talk about the advantages of having a RRSP; it is a Tax sheltered plan, where-in the money you make within the RRSP is not taxed.

That includes any income, like capital gains, dividend from stocks, Interest rates from Bonds and many other. The video also provides an example explaining the RRSP.

The video explains how it also works as Tax-Deferral Plan, which means that the amount of money you contribute to the RRSP, that amount can be deducted from your taxable income.

The reason why I picked this video is the direct one-on-one type of information flow it has. The creator has clearly mentioned everything a beginner should know about RRSP.

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RRSP Explained for BEGINNERS (EVERYTHING YOU NEED TO KNOW)

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This video explains about Mortgages. They explain how a mortgage is basically a percentage of the value of the property you borrow plus the interest rate. It explains the 2 type of mortgages. Starting with Repayment Mortgage, where-in whatever amount you pay, goes to the capital and the rest goes to the interest rate. The second type is Interest-only mortgage; it generally has lower monthly payments because you are not paying off the loan but the interest rate only. It is the clients decision as to how they want to pay the rest of the capital at the end of the term.

The reason why I picked this video is because it not only explains what a mortgage is but it also talks about 2 different type of mortgages giving viewers an idea on different types of mortgages.

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Explaining Mortgage | by Wall Street Survivor

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In this video, the creator explains how RRSP's are deferred taxes and not tax credit whereas with mortgages the interest rates are higher affecting yield. He explains how no RRSP can guarantee a better and higher return. He suggests that whenever you have extra funds, you should always pay off your mortgage.

The reason why I picked this video is because explains how mortgages are better than RRSPs and he also explain how it is better to pay off your mortgage than investing in an RRSP

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RRSP v.s Mortgage payment, which one to choose? | Hot Property Online

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In the above video, they explain what a RRSP is and what a mortgage is. Further in the video, with the help of 3 Quick Rules on Thumb it is explains why paying off your mortgage is better than a RRSP. It includes:

If the interest rate on your mortgage is higher than the returns on your RRSP, it is better to prioritize paying down the mortgage

If having debt makes you uncomfortable, consider paying off your mortgage.

If you do not have secure retirement plan, such as a pension scheme, consider contributing to your RRSP.

It also suggests a way to pay off your mortgage using the income tax refund from your RRSP.

The reason why I choose this video is because it gives a clear idea as to how you can make a decision on what is better; contributing to RRSP or mortgage.

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Pay down mortgage or contribute to an RRSP?  Your personal finance question explained in 3 minutes!

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This image shows the process of Mortgage.

I chose this image because it explains the process of mortgage in a very simple form. The image shows that the bank granted the family a $100,000 mortgage to buy a $150,000 house. They also put a down payment of $50,000.

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This image shows 5 reason to have an RRSP.

I chose this image because it provides different reasons as to why one would invest in an RRSP. It shows various reasons like combined RRSP, Using RRSP to pay for education or a home, contributions are non tax-deductible etc.

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What did you learn about your topic that surprised you the most?

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What did you learn about your topic that surprised you the most?

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What surprised me the most is, I went into this topic believing that RRSP's are a much better option than a Mortgage, because they are always seen as a burden and the RRSP seems like a cheat-code (Just like GTA) to avoid paying taxes while saving some money. But through my research I realized in the long run a Mortgage is always better the option.

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Provide a real-life example of how this topic is relevant or interesting for you:

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Provide a real-life example of how this topic is relevant or interesting for you:

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This topic is interesting to me because I have always grown up hearing Mortgages are bad, they are a burden or how people lose their houses because of not paying back Mortgage. My girlfriend and I are currently in talks about buying an apartment. This topic gave me an insight on how mortgages work and how they are a better option for me right now.

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If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

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If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

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If I were to provide advice to a family member or friend, the most important thing to convey would likely be the idea of a RRSP. Individually, if a person does not own a house and has no mortgage to pay, an RRSP makes sense and would be a safety-net for their retirement. I would share my knowledge about RRSP's.

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Welcome to our discussion on the important financial decision of investing in Registered Retirement Savings Plans (RRSPs) versus paying down a mortgage. In this exploration, we'll navigate the key considerations surrounding these two strategies, helping you understand the implications for your financial future. Join me as we break down the nuances of RRSP investments and mortgage payments, guiding you towards informed decisions aligned with your financial goals. Let's delve into the choices that can shape your financial well-being.