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Welcome to our Padlet wall! My partner, and I will be focusing on RRSP(Jenelle) and Mortgages(Sadaf). We hope we are able to provide some knowledge regarding these topics!

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Welcome to our Padlet wall! My partner, and I will be focusing on RRSP(Jenelle) and Mortgages(Sadaf). We hope we are able to provide some knowledge regarding these topics!

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Summary:

This video is a very useful one that goes over the basics of mortgages. This short video is a great way to learn about all the different types of mortgages and how they work in terms of payments.

Why I chose this video for this:

I chose this video first because it caught my attention with its simple animations and brief overview of different mortgages. It seemed like a very simple video to learn the very basics of mortgages.

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Types of Mortgage Loans Explained | Chase

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Summary:

This website gives an in-depth view of what our mortgage rates are looking like according to different plans and banks, as well as the best rates depending on the different banks you can go with. It also provides a calculator for seeing different interest rates according to different payments and prices of homes.

Why I chose this website:

As many are aware, the housing crisis in Canada is not news. Many Canadian's are struggling to afford rent, and even make their monthly mortgage payments. I thought it was really interesting to see the different options for payments according to banks and interest rates.

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Summary:

This video is still a "basic" video about mortages, but is gives more procedural information on Mortgages regarding lenders, payments, insurance etc.

Why I chose this video:

I chose this video because it gives more procedural information about mortgages to someone who knows very little about mortgages. Principal and interest making up the bulk of your mortgage payments was an interesting fact learned as well.

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

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

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Sadaf

What surprised me most was that interest rates are majority of peoples payments when they go to pay their mortgage. It is almost like you are making barely any payments towards the actual house in of itself but instead paying your bank for having a mortgage!

Jenelle

What surprised me the most was all the different types of registered plans that are available. It looks a little complicated, and choosing what is best for you seems daunting but necessary.

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

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

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Sadaf

I find this topic interesting to me because I have always seen my parents talking about the house mortgage and interest rates etc, and I never really took the time to really understand how big of payments these could really get, especially interest rates today with inflation.

Jenelle

This is interesting to me because my mom has just reached retirement age, and she has never invested in an RRSP or any other registered plan. I believe that she gets a Canada Pension (CPP) and a work pension, but it makes me think, what if she invested in an RRSP? How would it enhance her retirement now?

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3. 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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3. 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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Sadaf

The most important thing for me personally would beyour legal rights when it comes to mortgages- do lot's of research and talk to well knowledgable people who are experts in the mortgage area to know if you are really getting the best mortgage according to your financial situation.

Jenelle

I think the most important information to pass on would be to do research in your early income-earning years. The sooner you can figure out what is best for you, the sooner you can start to contribute to your plan. You have the opportunity to really put yourself in a great financial position when you retire.

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Summary:

This video by Sun Life uses simple universal images to demonstrate what RRSPs are and how they will benefit your life when you reach the age of retirement. It explains yearly contribution limits and how they are calculated.

Why I chose this video:

I decided to choose this video because the creator manages to sum up what an RRSP is in a very short but visually informative way. The choice of graphics makes it so simple for anyone to grasp an understanding of what RRSPs are and may even entice viewers to open one. One thing that I didn't know was the tax bracket you fall into during your retirement years.

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Summary:

This video gives you valuable tips and tricks when deciding if an RRSP is right for you. He explains carry-forward room higher tax bracket during your income earning years and helps you determine if an RRSP works for you. He explains that it is best for higher income earners and the savings in taxes later in life.

Why I chose this video:

I chose this video because I think it gives a more in-depth understanding of how you can take the most advantage of your RRSP. The most interesting thing I learned in this video was the Spousal RRSP option. He explains that you can take advantage of income splitting: half in an RRSP and half in a Spousal RRSP.

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RRSP Tips And Tricks: Maximize Your RRSP For Retirement

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Summary of the website:

This website has many subsections that you are able to choose from. Each one has a different purpose in it's information, whether you are looking to renew your mortgage, just starting to look for a mortgage, your rights when it comes to a mortgage, etc.

Why I chose this website:

Being in a law program, I wanted to find something that gave me some legal knowledge regarding mortgages, and I came across this website when I searched "legal rights and mortgages."

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Choosing a mortgage, renewing your mortgage, paying off your mortgage faster and more.

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Summary of the website:

This website is for people who are interested in investing their money. You can create an account and start investing in a variety of portfolios. They offer lower fees and account minimums than other investment companies and have financial advisors readily available to assist you. The site also contains useful blog posts that help enhance your understanding of the options available when investing.

Why I chose this website:

I thought this website was a good choice because you can gain knowledge about investing, sign up with them and start investing immediately. This site breaks down the different account types that they offer, and it is so simple to understand. Depending on your goals, this site has it all and makes everything easy and accessible.

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RRSP is an acronym for "registered retirement savings plan." This definition sounds mighty dry when you consider how RRSPs are superheroes of modern retirement planning for Canadian - true tax-obliterating, retirement-enriching wonders of the modern world.

Fasten your seatbelts for our whirlwind primer on the following RRSP related topics, several of which you might want to specifically read about in more detail:

Should these topics whet your appetite and leave you hungry for more on the subject of retirement, you also might want to check a more comprehensive guide to retirement planning.

What's an RRSP and how does it work?

An RRSP is what's called a tax-advantaged account, meaning that the government created them specifically to provide tax breaks to those who invest money in RRSPs as a way to motivate them to put away money for their retirement.

What exactly is the meaning of the term "tax-advantaged"? To you, Canadian taxpayer, tax advantaged means in practice "free government money." Here's how Jeff Nichols, Portfolio Manager puts it.

You can almost think about the RRSP as the CRA saying-you know what, don't pay us the tax this year. Pay it over the next 40 years when you'll probably be paying less tax. We don't get many handouts like this, so we should take full advantage of them!

In this specific case, RRSPs are what's called tax-deferred, meaning any money you contribute will be exempt from CRA taxes the year you make the deposit, and will only be taxed years down the line when you withdraw it. RRSPs are an amazing way to cut down a current-year tax bill.

Benefits of the Registered Retirement Savings Plan

Here's how a tax-deferred account like an RRSP works. Let's say you make $70,000 a year and you decide to put the maximum allowable into your RRSP-$12,600. When tax day comes around, the CRA will treat you as though you earned just $57,400.

Now, tax-deferred doesn't mean tax-free, and you will eventually have to pay taxes when you withdraw your money years down the line, but by the time you do so, you'll be retired, your income will almost certainly be smaller and, thus, your tax rate be lower than it is now.

RRSP Contribution Limit

Because RRSPs are registered accounts, they're subject to certain rules. One of the most important rules concerns the amount of money you can contribute to the account in any given year; it's either 18% of your past year's income or a maximum amount, whichever's smaller.

The amount changes, but you can find this year's and past years contribution limit here. You can also catch up if you didn't max out your investments in earlier years; to find out how much you can contribute, check out the Notice of Assessment that you got after filing your taxes last year.It's important to remember that even though you might have contribution room left over from previous years, you will not accumulate deduction limits. So imagine you've made ​36,000 into your account, but you'll only be able to deduct $18,000 of income from your current year taxes.

RRSP vs GRRSP

Only one letter separates the RRSP from the GRRSP, but that one letter could mean a difference of tens, even hundreds of thousands of dollars in retirement. Group RRSPs are just company-administered RRSPs. And though they have a few disadvantages, like limited investment options and possibly higher fees, they have one extraordinary advantage-employers will often match a portion or even every dollar of your GRRSP contribution.

With this this in mind, you might think of your retirement savings as one of those fabulous champagne towers that you've never actually seen at any wedding you've personally attended. The top cups always get filled first before anything below gets even a drop of champagne. If money is the champagne in this metaphor, you the absolute tip top cup should be your employer's GRRSP. That free-for-the-taking employer matching contribution will make an extraordinary difference in terms of compounding gains over the long term. And because you can have your employer withhold funds to deposit directly into your GRRSP, not only will you not be tempted to spend that portion of your pay, the money deposited will be pre-tax, meaning that a larger amount of money will get invested right away, versus investing yourself and having to wait six months to a full year to get that money back though a tax refund.

RRSP vs TFSA

Since both TFSAs and RRSPs are phenomenal in their respective ways, this a kind of a Batman vs. Superman question, one that begs the question why you should have an RRSP when a TFSA is similar and has no early withdrawal fees.

Here are a few of the biggest factors to consider:

If you haven't contributed much towards your retirement and you happen to have access to a pile of money right now through, say, a bonus, or inheritance, a TFSA might be the best option for you, since RRSPs have what's called an annual deduction limit, meaning that you won't be able to deduct over a certain amount in any given year. The number for 2020 is $27,230 but you can find past, current and future deduction limits on this CRA page.

TFSA are designed to be easily accessed before retirement if the funds are needed-which is good, especially for those with a more immediate goal in mind like buying a house or car. TFSAs are less good if you happen to be the type who's never been able to resist smashing a piggy bank.

If the funds are for your retirement, for tax reasons, TFSAs are generally considered preferable to RRSPs for those earning less than $50,000 a year.

Over contribution to RRSPs

What happens if you contribute too much to your RRSP? The CRA's pretty forgiving on these matters. First, you'll get a nice bit of cushion; any amount up to $2,000 over your annual limit will be forgiven (though it won't be considered tax-deductible). If you go over that, the CRA will likely mail you a notice that you've over contributed and encourage you to vamoose that excess dough. Should you fail to, they'll begin to assess a penalty of 1 percent on that over-contribution, assessed monthly, for each month you're over the limit. The CRA understands that mistakes happen, and should you find yourself in this situation, it may be worthwhile to do a bit of research on the topic of penalties and resolutions and seek forgiveness of this penalty.

RRSP Home Buyers Plan

Though RRSPs are often regarded as an impenetrable lock-box of retirement savings that will explode in your face if you try to access it before retirement, the Home Buyers Plan (HBP) provides one notable exception to that idea. The HBP, a program through the Canada Revenue Agency (CRA), allows eligible first-time homebuyers to withdraw up to $35,000 tax-free from their RRSP to be used towards a down payment on the purchase of the home. So, you can take advantage of the tax deductions that RRSP contributions provide while saving for a down payment on your home. Then, you can withdraw the funds tax-free and use them towards buying a home. But one thing you must remember: because HBP is like you loaning yourself money for a house, there are rules with great tax-implications you'll need to follow. Since they're a heck of a lot more accessible than RRSPs, if you're pretty sure you're going to be buying your first house soon, a TFSA might be the wiser account for your needs.

How to open an RRSP

You obviously have many choices of institutions where you might open an RRSP, but consider trying to find one that requires no minimum investment, charges low fees, and provides unlimited phone support from knowledgeable humans for every client. Opening an RRSP requires very little and can easily be accomplished from the comfort of your own home. Once you've chosen an investment provider, you'll likely be asked to provide your email and a create password that you'll use to access your account. Then you'll fill out a very brief risk survey to determine what sorts of investments will best fit your needs given when you hope to retire and how aggressive you can afford to be with your investments in the meantime. Then, all that's left to do is fund the RRSP, easily accomplished by linking a savings or checking account to your investment account.

Frequently Asked Questions about RRSPs

Who introduced RRSPs? RRSPs have been around since 1957 and were introduced by the federal government. Their aim was to help Canadians save for retirement by providing them a tax-deferred savings plan.

Who's eligible for an RRSP? Opening an RRSP is super easy. The only conditions for eligibility are that you're under 71 years of age, are a Canadian resident for tax purposes, and file income taxes in Canada. Minors under the age of 18 can set up an RRSP with written parental consent (or that of a legal guardian).

How much will having a RRSP reduce my taxes? Since you can contribute up to 18% of your past year's income, you could avoid paying tax on that portion of your income if you contribute the full amount every year. Also keep in mind that when you begin withdrawing from the RRSP during retirement, you'll pay less money on that income because you'll likely be in a lower tax bracket.

How much will my RRSP be worth/grow? The value of your RRSP depends on how much you've contributed each year, what assets your RRSP is invested in, and how many years you've had the account for. However, average rates of return for retirement accounts tend to hover between 4% to 8%.

What happens to your RRSP when you retire or die? When you retire, your RRSP turns into a Registered Retirement Income Fund (RRIF) that you can withdraw money from (income tax would apply to any withdrawals). If you die, however, your RRSP is usually rolled over to a beneficiary on a tax-deferred basis. The beneficiary would be designated by you, but if no beneficiary has been named then the proceeds fo your RRSP are considered part of your estate and will be distributed accordingly.

Can an RRSP be transferred to another person (partner/child)? An RRSP can't be transferred to another person while the account holder is still alive, but you can open a joint RRSP with a spouse. As a rule, you can't transfer money from your RRSP to someone else's RRSP while you're still alive.

Does contributing to an RRSP affect OAS? Contributing to an RRSP doesn't affect Old Age Security (OAS). Where you need to watch out is when you start withdrawing from your RRSP. Once your net taxable income during retirement reaches a certain level, your OAS be subject to a recovery tax, also known as the "clawback."

How do you find your RRSP issuer or manager? Many financial institutions (including this one) offer RRSP accounts. You simply sign up with the investment provider of your choice and then regularly deposit contributions to your RRSP via the institution managing your RRSP.

What is RRSP matching? RRSP matching usually takes place in Group RRSPs, which are RRSPs managed by your employer. Through them, your employer may choose to match your contributions to the RRSP, which means you'll be doubling your savings and racking up tax savings.

Can an RRSP be withdrawn at any time? You can withdraw from your RRSP before you turn 71, but those withdrawals will count as income-meaning you'll be taxed on the amount at a higher tax rate than you probably would if you withdrew it during retirement. You will also be charged a withholding tax, and you'll permanently lose the contribution room you used to originally make your deposit.

Can RRSP contributions be carried forward? Your RRSP contributions can be carried forward. Any unused contribution room can indefinitely be carried forward to future years.

Can an RRSP be transferred to a TFSA? You can transfer funds from an RRSP to a TFSA, but it's a two-step approach. First, you'll need to withdraw the funds from your RRSP, which means you'll be subject to a withholding tax and income tax on the amount withdrawn. You can then deposit those funds in a TFSA but you need to make sure you have enough available contribution room.

Can an RRSP be used to buy a house or for your education? You can use your RRSP to buy a house if you're a first-time homebuyer through the Home Buyer's Plan, and you can use your RRSP to pay for your education through the Lifelong Learner's Plan. RRSPs can also be used as collateral for a loan, but it's not considered advisable since it could lead to a higher tax bill.

Can an RRSP offset capital gains? An RRSP can offset capital gains from other sources if you have enough contribution room available. You don't have to worry about capital gains in an RRSP itself because those investments are tax-sheltered.

Can an RRSP be garnished? Whether or not your RRSP can be garnished-ie. claimed by creditors-depends on what province your account is held in and under what circumstances it's been opened. However, RRSP proceeds are usually protected under the The Bankruptcy and Insolvency Act, excluding any contributions made within the last 12 months.

Ready to take five minutes to open the finest RRSP ever devised? Sign up to Wealthsimple, the only automated investing services to offer all of its client's unlimited human support. Every Wealthsimple client gets state of the art technology, low fees and the kind of personalized, friendly service you might have not thought imaginable from a low-priced investment service.

Last Updated August 17, 2020

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RRSP is an acronym for "registered retirement savings plan." This definition sounds mighty dry when you consider how RRSPs are superheroes of modern retirement planning for Canadian - true tax-obliterating, retirement-enriching wonders of the modern world.

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Summary of the website:

This is the official website of the Government of Canada. It contains any and all information you need when it comes to government interactions. You can get information on taxes, pensions, personal finance, paying for education, and so much more. You can learn how to set up an RRSP, make contributions or withdrawals, and learn about tax implications upon death.

Why I chose this website:

I chose this website because it gives you the most accurate and up-to-date information straight from the source. You can look into and plan for things that you may not have even thought to consider. The most interesting thing for me was learning about the different types of registered plans: Registered Pension Plan (RPP), Registered Retirement Income Fund (RRIF), and more. This is a site that I will need to look into more.

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I chose this photo specifically relating to mortgages because I find that a lot of mortgage payments people have and are making, are towards the interest accumulated on top of their mortgage, and it can fill like the interest is a "burden" that you are carrying on your back.

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I thought that this image was a simple but clever way to show what an RRSP is. The clock represents time, the rising stack of coins shows growth, and the jar that reads "Retirement" represents the benefits that you receive at the end (retirement).