Do you still participate in RRSP season?

On the edge of retirement, I still do. 🙂

You should consider the same while you’re still working too.

Read on.

Why Should RRSPs Matter to You?

Two of the major registered savings accounts in Canada are Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs). Both “savings” plans deliver BIG benefits – both accounts allow you to grow your investments over time but only one account is really tax-free long-term.

Any amount you save in your RRSP (up to your annual contribution limit) will be deducted from your taxable income for that year and therefore can effectively reduce your tax bill. However, the CRA always gets you in the end – any RRSP or eventual Registered Retirement Income Fund (RRIF) withdrawals are counted as taxable income.

This is why year after year after year, many Canadians don’t see any value in investing inside their RRSPs — because they would eventually have to pay taxes.

A former headline in the Financial Post from my friend Jon Chevreau hit on this subject:

“Almost 40% of Canadians see ‘no point’ in investing in RRSPs: poll — here’s why they’re wrong”

RRSPs should matter to you because regardless if you have to pay taxes on the RRSP/RRIF withdrawals, chances are, when you retire, you will be in a much lower tax bracket than when you were working.

Therefore, you can get a considerable return by investing in RRSPs – your investments inside the RRSP can compound much more than in a non-registered account.

Investing inside the TFSA can be a great alternative as well.

Do you really have to choose?? RRSP vs. TFSA

I get it, financial pressures are huge these days.

I keep reading articles about it all the time – that highlight financial pressures (insufficient income, high cost of living, debt repayments, etc.) remain a huge barrier to saving for retirement.

This means you might have to choose which registered account you invest in.

When I get pressed on this myself, if you have to really have to choose, I suggest the TFSA.

I won’t repeat my answer in full here, but you can find it below.

I’ll continue to maximize my TFSA first because…

The TFSA is a gift of an account for those with limited savings for retirement because at any age:

Earnings and growth inside the TFSA are not taxed during the accumulation phase, nor when money is withdrawn from the TFSA in retirement unlike the RRSP/RRIF, and There is no “end date” on the TFSA like the RRSP – it does not need to be converted like the RRSP does in the year you turn age 71.

Furthermore, managing the RRSP-generated tax refund remains the linchpin in any RRSP vs. TFSA argument.

Managing the refund well is the linchpin in the RRSP vs. TFSA debate

If you really, really have to choose one over the other, go with the TFSA for retirement savings but ensure you don’t raid this account for near-term spending and borrow money from your future self.

Does this mean RRSPs are not worth it?

Of course not.

Retirement planning is deeply personal and unique.

My site is full of content that expresses so – so at the end of the day using the RRSP or TFSA or Non-Registered Account or all three can be valid accounts for retirement planning. Accounts are tools in your retirement saving and investing toolbox, hardly one-size-fits-all things to use.

A reminder the 2025 RRSP contribution deadline is March 2, 2026.

This means Canadians may be eligible to contribute up to 18% of their previous year’s earned income, to a maximum of $32,490 for the 2025 tax year, plus unused carried‑forward room (subject to pension adjustments).

More information can be found via CRA here.

How have RRSPs worked for us?

Rather well over the years.

My wife is now retired in part to saving and investing inside her RRSP.

When she was working, she invested in a mix of Canadian stocks along with low-cost ETFs to grow her income stream and portfolio value over time this way. It was a boring investing approach but it worked wonders over time.

I’ve done the same with my RRSP although because I’m still working in this early part of 2026, I might still make an RRSP contribution this spring to lower my taxable income for 2026.

Before I close this theme, here are more RRSP facts for or any “RRSP season”:

An RRSP is an account, not a mutual fund or an investment itself.Contributions to an RRSP are tax deductible, so you can use these tax deductions to reduce your taxable income. (This is what I will do again.)Some Canadians shouldn’t use an RRSP (their income may not be high enough (yet) to reap the key benefits of this account). See logic above including financial pressures. RRSPs are highly effective for Canadians who will be in a lower tax bracket in retirement versus their contribution years.Contributions to an RRSP for the current tax year do not always have to be made in February during any “RRSP season”.Contribution limits are based on the contributor’s “earned income” and can be found on his/her tax notice of assessment.There are penalties if you over-contribute to your RRSP although a small exemption exists.Unused RRSP contribution room can be carried forward, for future tax deductions in future tax years. So, even if you’re in a lower income bracket now consider contributing; just don’t claim the amount for any tax refund. Then, you can take advantage of the tax-deferred growth while saving those tax credits to claim at a future date and time once you make more income. This is a counter-argument to the “RRSPs don’t matter” perspective based on any (lower) earned income. Also, a unique thing – unused RRSP contributions have some interesting tax ramifications. You typically deduct your contribution amount on your tax return to lower your tax liability and pay less in taxes that tax year – this is what I do. But….you don’t need to deduct your RRSP contribution on your tax return in the same year you make it. You can choose to take that deduction in a future year. For instance, it may be smarter for you to take the deduction in a year where your income is greater so you fall out of a higher tax bracket. Something to think about!After you select investments for the account, the income you earn on those investments inside the RRSP are tax exempt, as long as money stays in the account.A common type of RRSP is an individual RRSP, registered in the name of the person contributing to it. There are also spousal RRSPs and group RRSPs.RRSPs can be managed by a professional money manager but you can do-it-yourself (self-directed).If one spouse is in a different tax bracket than his/her partner, RRSP contributions can be used to lower the total amount of income taxes a couple must pay (income splitting).Some people believe you can only have one (1) RRSP account. Not true! There is no limit on the number of RRSPs you can have. The limit is on the total amount you can deduct. However, most people find it simpler to have only one or at most two plans (the second being with their employer-sponsored RRSP) therefore making it easier to keep track of their RRSP investments.You’re not as rich as you think: when you take money out of the account, you have to pay tax. Some exceptions apply: RRSPs can be used for home purchases and education and there are programs associated with the RRSP for this.There are rules and age restrictions when you must collapse the account. In fact, Canadian taxpayers can contribute to their RRSP right up until December 31st in the year they turn age 71.Withholding taxes * apply to RRSP withdrawals.RRSP *withholding taxes:If you take up to $5,000, you’re going to pay 10%.If withdrawals are between $5,000 and $15,000, the financial institution will hold back 20%.If you withdraw more than $15,000, 30% is held back.

You have to report the amount you take out on your tax return as income. At that time, you may have to pay more tax on the money — on top of the withholding tax. It depends on your total income and tax situation for any tax year.