Wednesday, March 22, 2023

Why Aren't People Using RRSPs?

(Image created by A.I. DALL-E/Bing)

RRSP is a type of saving accounts available to Canadians with the ability to gain tax break or money back, for each dollars put in it. The catch here, is you need to give that tax break money back depending on how much money you're making when you take it - the idea here is that you should only take that money out once you retire and have little other sources of income.
While few people save, a lot less seems to be putting money towards their RRSPs and that's a shame considering how much money you can get back from doing so. Why isn't there more people putting money towards their RRSPs?
  • They may not have enough money to put towards RRSPs.
  • Some are afraid that they may need the money prior to retirement and not have enough money to pay the tax break back.
  • There's a lack of understanding of what an RRSP is.
  • They file their own taxes and are afraid that RRSP would make things more complicated and they would make mistakes.
  • They may be putting their money towards other endeavors for their retirement.
Whatever the case may be, you should put forth some effort in understanding RRSP in order to take advantage of the benefits it may bring to you. The strategy a friend of mine like to use is take whatever tax break money he gets from RRSP and put it towards next year's RRSP contribution. 

The sooner you start the better it is.

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