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When searching for a savings account to build funds for your retirement, consider opting for a registered retirement savings plan (RRSP). By contributing to an RRSP, you use pre-tax dollars, potentially reducing your taxable income for the contributing year. The funds saved in an RRSP offer investment flexibility, allowing you to explore various options such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs). This flexibility empowers you to choose how to invest your money wisely.
The main advantage of an RRSP lies in the tax-deferred growth of the funds saved within it, as taxes are only applicable upon withdrawal during retirement. Moreover, the contribution limit for RRSPs is determined as a percentage of your income, with an annual maximum limit. This structure enables you to accumulate a substantial retirement fund over the years.
Major Types of Registered Retirement Saving Plan (RRSP)
In Canada, various types of Registered Retirement Savings Plans (RRSPs) exist. Individual RRSPs are owned and overseen by an individual, whereas spousal RRSPs enable one spouse to make contributions to an RRSP in the other spouse’s name. Additionally, employers may provide Group RRSPs as a benefit to their employees.
Key Features
Registered Retirement Savings Plan (RRSP) Coverage Options