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Contribute Every Year

Making smaller contributions every year rather than making larger ones every few years can be more financially beneficial. That's because your money has more time to compound within the tax-free environment of your RRSP.

For example:  

Mary, age 30

  • contributes $1,000 a year for 35 years*
  • earns 6% average annual compounded return
  • total RRSP investment: $35,000
  • total worth of RRSP at age 65: $118,121

Karen, age 30

  • contributes $5,000 every 5 years for 35 years*
  • earns 6% average annual compounded return
  • total RRSP investment: $35,000
  • total worth of RRSP at age 65: $104,771
*Contributions made at the beginning of the year.
 
 
Mary is ahead by $13,350.

Plus she probably found it easier to make her smaller annual RRSP contributions
 
Use Your Unused Contribution Room

Many people have unused RRSP contribution room, which is the difference between what you actually contributed and your maximum allowable contribution amount. This amount can be carried forward from year to year. The carry forward provision came into effect in 1991, so any unused RRSP contribution limits since 1991 can be carried forward to another year.

Check your Notice of Assessment from Revenue Canada for your total allowable contributions carried forward and try to put that amount into your RRSP this year. If you don’t have the money readily available, consider taking out an RRSP loan.
 

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