An RRSP is a registered investment account that lets you save for your retirement by deferring taxes on your investment earnings. This means more of your money can stay invested and grow faster.
An RRSP also helps you lower your tax bill today, by allowing you to deduct RRSP contributions from your taxable income. By the time you retire you will likely be in a lower tax bracket, so withdrawals are taxed at a lower rate than today.
Registered Investment Accounts
Registered investment accounts offer unique tax advantages to help you save for the future. For example, the Registered Retirement Savings Plan (RRSP) lets you deduct your contributions from your taxable income now and defer the taxes until you withdraw that money in retirement, while investment income you earn in a Tax-Free Savings Account (TFSA) is never taxed. The features, benefits and rules for registered accounts are determined by the Government of Canada.
Here’s why nearly half of Canadians polled invest in an RRSP1:
Use an RRSP to save for retirement while also saving for anything in a TFSA
Contributions reduce your annual income, lowering your tax bill
Taxes on your investment income are only paid when withdrawn
You can borrow money from your RRSP to go to school2 or buy your first home3 without penalty, provided it is repaid within the required time
You can make up for missed contribution room from previous years
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How an RRSP Works
Here's how an RRSP can help you save for a comfortable retirement:
An RRSP is a type of registered investment account, which means you can hold income-generating investments in it versus just cash (like a savings account).
The types of investments you can buy in your RRSP depend on where you open an account. You also want to consider your appetite for risk when choosing investments.
RBC Royal Bank: Ideal if you want investment advice and access to an advisor – in-person, by phone or over video.
Tip: At RBC, you can open an RRSP with any amount you are comfortable with. Just keep your contribution (deduction) limits in mind.
Since the investment income you earn in an RRSP (interest, dividends or capital gains) is not taxed until it’s withdrawn, it has the opportunity to grow faster than it would in a non-registered account.
Another way to save faster is by setting up regular (weekly, monthly, etc.) automatic contributions into your RRSP.
Dividend:
Distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Dividends are often quoted in terms of the dollar amount each share receives (dividends per share or DPS).
Capital Gains or Capital Loss:
Profit or loss from the sale of real estate, stocks, mutual funds, and other holdings classified as capital assets under the federal income tax legislation. The tax treatment of capital gains is different from other types of investment income such as dividends and interest income.
You decide how much to save and how often—weekly, bi-weekly, monthly—it’s up to you.
Tip: Keep your available RRSP contribution (deduction) room in mind when setting up automatic contributions.
Contributions are automatically debited from your bank account (at RBC or another financial institution).
You can change how much you want to save, how often you contribute, and stop or pause your contributions at any time.
By December 31 of the year you turn 71, you must stop contributing to your RRSP and convert it to an income option such as a Registered Retirement Income Fund (RRIF) or annuity.
A RRIF is like an extension of your RRSP, but instead of putting money in, you withdraw money to use throughout retirement.
You may be able to borrow from your RRSP for other purposes, as well.
Here are a few things to know:
Withdrawals from your RRSP or RRIF are considered part of your taxable income.
Withdrawals can affect your eligibility for government benefits, such as Old Age Security (OAS).
Early withdrawals from your RRSP will raise your tax bill and have a withholding tax deducted upfront.
The Home Buyers’ Plan may let you borrow up to $35,000 from your RRSP to buy your first home.3
The Lifelong Learning Plan may let you borrow up to $10,000 in a calendar year (to a maximum of $20,000) from your RRSP to cover training or education for yourself or your spouse.2
Numbers to Know
$27,830
2021 RRSP deduction limit—or 18% of your earned income the previous year—whichever is lower
$35,000
Maximum amount you may be able to borrow from your RRSP to buy your first home3
71
The age at which contributions stop and you need to convert your RRSP to an income option (like a RRIF)
See How Saving Regularly Could Help Your RRSP Grow
The following chart shows how $50 contributed weekly, earning 6% interest, can grow to over $218,000 over 30 years.
The following chart shows how $50 contributed weekly, earning 6% interest, can grow to over $218,000 over 30 years.
RRSP Calculator
See how convenient it is to save with regular, automatic contributions to your RRSP*.
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Individual RRSP: The most common type of RRSP is a plan registered in your name. The investments held in the plan and all the tax benefits belong to you.
Spousal RRSP: When you contribute to a spousal RRSP, you still get the tax deduction but the plan is registered in your spouse's name. (Your spouse's contribution limit to his or her own plan is not affected.) It’s a great income-splitting option if one of you earns more than the other.
Locked-in RRSP: If you leave your employer before you retire, you may be offered the option to manage your vested pension funds. A Locked-in RRSP—Locked-in Retirement Account (LIRA) in some provinces—enables you do this.
Group RRSP: Some employers offer a Group RRSP, a collection of individual RRSPs for the company’s employees. As an employee, your RRSP contributions are taken from your pre-tax pay through payroll deductions, reducing your tax burden immediately.
At RBC, you can open an RRSP at:
RBC Royal Bank: Ideal if you want investment advice and access to an advisor—in-person, by phone or over video. Choose from mutual funds, GICs and savings deposits to hold in your RRSP.
RBC Direct Investing : Ideal if you want to trade and invest yourself using powerful online tools and resources. Choose from stocks, options, Exchange-Traded Funds (ETFs), mutual funds, bonds and GICs to hold in your RRSP.
RBC InvestEase : Ideal if you want to invest without having to research a single investment. Answer a few questions and RBC InvestEase will match you to a professionally-built ETF portfolio.
The types of investments you can buy in your RRSP depend on where you open an account. You also want to consider your appetite for risk when choosing investments.
RBC Royal Bank: Offers mutual funds, GICs and savings deposits. Ideal if you want investment advice and access to an advisor—in-person, by phone or over video.
RBC Direct Investing : Offers stocks, options, Exchange-Traded Funds (ETFs), mutual funds, bonds and GICs. Ideal if you want to trade and invest yourself using powerful online tools and resources.
RBC InvestEase : Offers ETF portfolios designed for different investors (each portfolio holds a diverse mix of ETFs). Ideal if you want to invest without having to research a single investment.
Yes, you can set up automatic contributions to your RRSP using funds from your chequing or savings account at RBC or another financial institution.
Try the RRSP calculator to see the benefits of regular, ongoing contributions.
This amount varies per person.
To find out the exact amount you can contribute for the current year, check your most recent Notice of Assessment from the CRA, which you can access through the “My Account” function on the CRA website.
As a guideline, your allowable RRSP contribution for the current year is the lower of:
18% of your earned income from the previous year
The maximum annual contribution limit for the tax year
The remaining limit after any company-sponsored pension plan contributions
Below are the maximum annual RRSP contribution limits from 2013-2021
These results are general estimates only and
(i) are based on the accuracy and completeness of the data you have entered,
(ii) are based on assumptions that are believed to be reasonable, and
(iii) are for informational purposes only and should not be relied on for advice.
Actual results may vary, perhaps to a large degree.
You should consult your professional advisor before taking any action.This calculator tool does not represent or replace a comprehensive financial plan or represent any type of financial planning service. The scope of this analysis is limited to one aspect of your financial goals.
Royal Bank of Canada does not make any express or implied warranties or representations with respect to any information or results in connection with this calculator.
Royal Bank of Canada will not be liable for any losses or damages arising from any errors or omissions in any information or results, or any action or decision made by you in reliance on any information or results in connection with this calculator tool.
1)
RBC 2020 Financial Independence in Retirement Poll. Findings from the 30th annual RBC RRSP Poll, conducted by Ipsos from December 10 to 17, 2019 on behalf of RBC Financial Planning, through a national survey of 2,000 Canadians aged 18+ who completed their surveys online. Quota sampling and weighting are employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.2 percentage points had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
2)
Under the Lifelong Learning Plan, you can withdraw up to $10,000 per calendar year for your own or your spouse's full–time training or post–secondary education.
The total amount that can be withdrawn is $20,000 each with withdrawals over a maximum of four consecutive years.
At least 10% of the amount borrowed must be repaid each year, over a maximum period of 10 years.
3)
You can withdraw up to $35,000 from your RRSP to buy your first home under the Home Buyers’ Plan.
The funds must have been on deposit at least 90 days before you withdrew them, and a signed agreement to buy or build a qualifying home is required.
At least 1/15 of the funds must be repaid each year, beginning two years after the funds were withdrawn. For details see Canada Revenue Agency Home Buyers’ Plan.
4)
Assets in an RRSP must be Qualified Investments under the Income Tax Act. If the TFSA holds non-Qualified Investments, it could be subject to tax.
5)
Real-time streaming quotes are available on stocks and ETFs for all clients.
Real-time streaming quotes are also available on options and over-the-counter (OTC) securities for Royal Circle and Active Trader clients, upon accepting the terms and conditions of all exchange agreements on the RBC Direct Investing online site.
6)
RBC InvestEase is a restricted portfolio manager providing access to model portfolios consisting of RBC iShares ETFs with each model portfolio holding up to 100% of RBC iShares ETFs. RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. (RBC GAM) and iShares ETFs managed by BlackRock Canada Limited (BlackRock Canada). RBC GAM and BlackRock Canada have entered into a strategic alliance to bring together their respective ETF products under the RBC iShares brand, and to offer a unified distribution support and service model for RBC iShares ETFs.
Other products and services may be offered by one or more separate corporate entities that are affiliated to RBC InvestEase Inc., including without limitation: Royal Bank of Canada, RBC Direct Investing Inc., RBC Dominion Securities Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company. RBC InvestEase Inc. is a wholly-owned subsidiary of Royal Bank of Canada and uses the business name RBC InvestEase. The services provided by RBC InvestEase are only available in Canada.
7)
RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc.
Royal Bank of Canada and Royal Mutual Funds Inc. (RMFI) make no warranties, express or implied, as to the accuracy or completeness of the information contained herein.
Royal Bank of Canada and RMFI shall not be liable for any losses or damages arising from any errors or omissions in information contained in this calculator.
Financial planning and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
Information about the Registered Retirement Savings Plan is based on what is currently available from the Canadian government and can be subject to change.
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RRSP Calculator
