Canada | Personal Finance

RRSPs: when to invest

To decide which retirement savings account is for you, you need to consider these factors

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Young couple meeting with an financial advisorTalk to you financial adviser and tax accountant to decide whether an RRSP makes sense for you (Shutterstock/goodluz)

Canadians are not putting enough away for the future, according to Michael Deepwell, CPA, CA, CFP, CLU, principal with Lamp Financial.

As a CPA, he points to the numbers to buttress his argument: for example, Canada’s household savings rate dropped to 0.80 per cent in the third quarter of 2018 from about 3.5 per cent two years ago. And those figures are more dismal when you consider that the personal savings rate averaged 7.29 per cent from 1981 until 2018.

That said, not everyone is following the non-saving trend: many Canadians are still committed to building a nest egg for retirement. To decide whether an RRSP makes sense for you, you’ll want to look at a number of factors, says Deepwell. These include: 

  • your level of employment and other income. This is referred to as earned income, and it generates your RRSP contribution room;
  • your other sources of income, both at the time of contribution and when you withdraw the funds. This might include investment income or an employer pension;
  • your taxable income level, both at the time of contribution and when you withdraw the funds; 
  • your age at the time of contribution;
  • whether you have a spouse or common-law partner as defined for tax purposes; 
  • the type of investments you intend to hold and the expected returns (for example, include capital gains, dividends, interest); 
  • whether you will remain in Canada during your retirement years or become a non-resident for tax purposes. 

Once you have carefully considered these factors with your adviser and tax accountant, you will be in a good position to decide whether you should be looking at an RRSP or another vehicle to help fulfill your retirement dreams. 


To learn about RRSPs and how they compare to other retirement savings vehicles, see CPA Canada’s Understanding RRSPs and TFSAs and The Procrastinator’s Guide to Retirement. To plan a financial literacy session in your community, see Planning for retirement