Why would you take unused RRSP contribution room into retirement?
If you are retiring this year and will take a company pension or the copycat pension, contribute now to your RRSP.
Why? If you don’t use the RRSP room, you lose it.
Consider this example:
Let’s say we have a client named Susan. She is retiring at the end of this year and will take the copycat pension.
Yes, she does need room available if the insurance company offers her a “cash surplus” BUT she has tons of room.
In fact, she has $125k of RRSP contribution room. This is not uncommon.
Furthermore, this year will be her highest income year ever. She may work part time in retirement.
So, her marginal tax rate is the highest ever.
That is the perfect use of the RRSP. Save at a high tax rate and withdraw at a low tax rate.
You need to act now. Remember that by contributing in January or February, you can use the contribution in last year OR this year.
That’s great flexibility. Don’t take unused RRSP room into retirement.
– BRUCE YOUNGBLUD, CFP, CIM
Investment Advisor and Certified Financial Planner
