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T Don't overlook the RRSP contribution advantage Dollars & Sense Guest Contributor 23 | Thursday, February 26, 2015 | OAKVILLE BEAVER | www.insideHALTON.com he annual RRSP season is winding down. The last day to contribute and use the tax deduction for 2014 is Monday (March 2). Seriously consider making a contribution if you have not already done so. Years from now you will be happy you did. An RRSP , which stands for Registered Retirement Savings Plan, is the most popular savings vehicle in Canada. It was introduced in 1957 to encourage Canadians to save for retirement. The strongest attraction for contributing is the tax bene ts and there are many different tax advantages available with an RRSP investment. Your contribution can be claimed as a tax deduction to reduce your taxable income and therefore reduce your income tax. In addition, savings within an RRSP grow tax-free while they remain in the plan but are fully-taxed when they are withdrawn. The advantage is taxes can be deferred for years and possibly decades. There are a few income tax considerations to know about. What is the marginal tax rate during the year of using a contribution as a tax reduction and what is the anticipated income tax rate at the year that the funds will be withdrawn? For example, if you save taxes at the rate of 40 per cent for every dollar contributed, then pay income tax during retirement when the RRSP funds are withdrawn at a lower rate of say 25 per cent, then you have reduced your payable taxes. Most Canadians will likely be in a lower income tax bracket when funds are withdrawn during retirement than they were during their working years. In that case, an RRSP contribution makes perfect sense. If it is anticipated that you will be in a higher income tax bracket during retirement, then the tax cost of withdrawing funds Peter Watson contributing from one year to the next. We suggest trying to assume you will contribute every year. An excellent way to do this is to establish an automatic monthly saving plan with contributions going to your RRSP . Every month the nancial institution you have your RRSP with will take money from your bank account and contribute to your RRSP . At some point, you will be retired and for most, a signi cant RRSP will be the difference between living the kind of lifestyle you would hope for and being forced to dramatically reduce your standard of living. We recommend you make regular RRSP contributions. -- Submitted by Peter Watson, MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner might offset the tax advantage of claiming those deductions in earlier years when you were at a lower income tax rate. One consideration to be aware of is that future RRSP withdrawals during retirement will increase your taxable income. This could lead to the reduction of government bene ts including the Old Age Security allowance. Once you have invested in an RRSP , try to resist the temptation of withdrawing funds. Treat your RRSP as your own personal pension plan that will grow and only be used when you have retired. In theory, that makes perfect sense. However, in reality, some individuals do have a habit of withdrawing funds from their RRSP . Then when retirement happens, those individuals will be without suf cient RRSP funds that are needed to meet the desired lifestyle. That is the difference between employees who have workplace pension plans and those who contribute to their own RRSP . A pension plan does not allow the individual to make withdrawals. More Canadians are relying on RRSPs because most employers do not want to assume the nancial obligations to pay a pension to their retired former employees. Pension plans are still used extensively by various government employers. For the vast majority of non-government workers, you will be contributing to an RRSP . That requires ongoing decisions about Halton.ca 311 PUBLIC INFORMATION CENTRE Wastewater Main Replacement and/or Rehabilitation on Tansley Drive, 1500 Tansley Drive, Third Line and Jennings Crescent Town of Oakville PR-2983 Halton Region is planning to replace the watermain and wastewater main beginning spring 2015 at the following locations: · Tansley Dr. from east of Third Line to Sherin Dr. · 1500 Tansley Dr. · Third Line from 1500 Tansley Dr. to 150m south · Jennings Crescent from Jones St. to Jones St. TOWN HALL MEETING Ontario's Greenbelt Under Threat Farmland and forests in Ontario's Greenbelt are at risk of being paved over. Ask questions and hear from experts about how inappropriate development, unnecessary infrastructure, such as new megahighways, and the dumping of contaminated soil put our farmland, nature, water and climate at risk. A Public Information Centre will be held for residents who want to learn more about the construction project. Please drop in at any time. Halton staff will be available to answer your questions. Date: Time: Place: Thursday, March 12, 2015 6:30 ­ 8:30 p.m. Queen Elizabeth Park Community and Cultural Centre (Multi-Purpose Room) 2302 Bridge Road, Oakville If you would like to learn more about the project and are unable to attend the Public Information Centre, please contact: Ron Joyce Centre Auditorium DeGroote School of Business 4350 South Service Road, Burlington | Parking: $3.50 Thurs. March 5, 2015 6 pm: meet & greet community groups 7 pm ­ 9 pm: panel discussion Find out how you can help strengthen the Greenbelt! Greenbeltunderthreat.ca Martin Larkin Project Manager Public Works 905-825-6000 x 7614 Martin.Larkin@halton.ca Please contact us, as soon as possible, if you have any accessibility needs at Halton Region events or meetings. 260215