K & R Strategy Group

Do your best to stay safe and warm in all this snow!

Happy Tuesday! We hope your new years' resolutions are working out :)

WHY SHOULD YOU USE AN RRSP? The beginning of the year affords new beginnings, resolutions, and opportunities. Many people decide to ring in the New Year by making changes or improvements in their lives physical, emotional, behavioral, experiential, even financial. We at K&R hope that your new years’ resolutions have worked out for you so far. We also hope that if you are looking for an investment in your future, you will consider a Registered Retirement Savings Plan. A Regi...stered Retirement Savings Plan (RRSP for short) is an investment account designed to help Canadians save for retirement. The need to plan for one’s post-work future is recognized by the government, so contributions to RRSPs are tax-deductible. In fact, RRSPs come with benefits throughout life. RRSPs can hold many different types of investments. The sooner you start to save, the more you reap the rewards of it. If a twenty-five-year-old built up an RRSP over ten years then retired at sixty-five, he or she would have more than double what someone who started saving at thirty-five would have. Tax-deferred growth: any profits made on investments within an RRSP account are not immediately taxable to you as income. The money you invest can compound without your having to pay taxes on the gains. Buying an RRSP will reduce your taxable income. If you earn more money than your spouse or common-law partner, you can help build their tax-free savings by contributing to a spousal RRSP. Then, your retirement income will be split more evenly. This may reduce the total amount of tax you pay. The income earned on your RRSP is not taxed until it is withdrawn. By the time you begin to withdraw, you will likely be in a lower tax bracket than in your earning years, so the tax rate will be lower. At retirement or age 71, RRSPS can be converted into Registered Retirement Income Funds (RRIFs), and then automatic payments to your bank account can be set up. RRSPs are a great way to ensure security as you enter retirement. Even if you are starting with smaller contributions when you’re young, they add up over time to become valuable in the long term. It is something everyone should consider investing in. If you are planning on investing this year, there is a deadline on when these investments can be made for the tax year 2018. The final date is March 1, 2019. Another interesting strategy is to supplement your retirement income with Tax-free Savings Accounts, which we will discuss in a later post. Don’t miss it! Thanks for reading. Be sure to share with your friends!

Happy 2019 to all you wonderful people!