What Is an RRSP?
Canada’s tax‑deferred retirement account for long‑term savings.
An RRSP (Registered Retirement Savings Plan) is a Canadian account designed to help you save for retirement while reducing your taxes. Contributions are generally tax‑deductible, your investments grow tax‑deferred, and you pay tax when you withdraw the money (usually in retirement).
RRSPs are useful because they let you shift income from high‑tax years to lower‑tax years later, which can reduce your overall tax bill.
Why RRSP Matter
- You can lower your taxable income when you contribute
- Investments grow without annual tax drag
- Withdrawals are taxed as income later
Common RRSP Use Cases
- Retirement savings for higher earners
- Reducing taxable income during peak earning years
- Coordinating with CPP/OAS later in life
Key Things to Know
- RRSP withdrawals are taxable income
- Withdrawals can affect benefits like OAS (clawback risk)
- RRSPs often work best alongside a TFSA
Bottom line:
RRSPs are powerful if you want tax deferral and you expect to be in a lower tax bracket in retirement. For many Canadians, the best approach is RRSP + TFSA together.