Personal Finance

Trying to determine how much to contribute to RRSP

  • Last Updated:
  • Feb 27th, 2010 3:14 pm
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Deal Addict
Jul 28, 2005
3237 posts
25 upvotes
sully wrote:
Feb 27th, 2010 10:07 am
Just out of curiosity, where are you getting that information from? I want to work the figures on my own situation and those figures would be helpful.
Here are a couple of easy to use tax calculators and bracket listings: http://www.ey.com/ca/en/services/tax/tax-calculators


And this contains more comprehensive and somewhat more complex tools: http://taxtips.ca/
Deal Fanatic
Jul 1, 2007
8202 posts
1102 upvotes
Bringing your total income down to $33,820 would save you 31-38cents on the dollar and additionally will bring your income down to the sweet spot where you qualify for the maximum GST credit (it's a small differene, but free money nonetheless). Lowering your income any more would reduce your GST credit and would be at a lower dollar for dollar RSP tax deferral rate.
[OP]
Sr. Member
Dec 12, 2009
800 posts
101 upvotes
Nova Scotia
asdfvcx wrote:
Feb 27th, 2010 11:08 am
Then that would seem to indicate that your first $11.5k contribution to your RRSP is saving you $4230 in taxes. (In case you haven't already figured that out).
Thanks. I knew that it was something easy I was taking out of the equation. :)
Deal Fanatic
User avatar
Dec 27, 2009
6804 posts
3969 upvotes
Ottawa, ON
i6s1 wrote:
Feb 27th, 2010 2:33 am
You can contribute 35k all now and claim only 11k of deductions this year, and another 11k (rising with your salary if tax brackets stay the same) each year after.
This is the correct answer. You can contribute the whole amount now, and then it is up to you how much you want to claim as a deduction for this year and how much you want to save for future years. The advantage to contributing it all now is that you get the benefit of more years of compound, tax-free growth within your RRSP. This can actually make a big difference to the balance by the time you retire.
Jr. Member
Nov 11, 2009
117 posts
4 upvotes
Chickinvic wrote:
Feb 27th, 2010 2:42 pm
This is the correct answer. You can contribute the whole amount now, and then it is up to you how much you want to claim as a deduction for this year and how much you want to save for future years. The advantage to contributing it all now is that you get the benefit of more years of compound, tax-free growth within your RRSP. This can actually make a big difference to the balance by the time you retire.
I agree, if all the money is available to put into your RRSP. If you have a mortgage (or any other debt), I would put some of your savings into a lump sum payment for it.

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