Registered Retirement Savings Plans 2010
Background:
Revenue Canada's site provides all the detail one could possible need.
This page hotlinks to fuller detail on both Home Buyer's Plan and Lifelong Learning Plan.
RRSP.ORG
offers a wealth of brief articles and tools concerning all aspects of RRSPs. A key advantage to this site is that no product is being pushed, no advertising clutters the message.
Tax Calculations:
Every dollar contributed to an RRSP defers tax. But how much?
Calculate your tax savings by testing various RRSP contribution amounts with this simple Tax Savings Calculator.
A more detailed Income Tax Estimator.
Retirement Income Calculations:
Many internet calculators fail miserably. They may have piss-poor and unstated assumptions (inflation? what inflation?); they may take it for granted that you're entitled to 100% full benefits from both the Canadian Pension Plan and Old Age Security, or they may not consider government benefits at all (perhaps because they're a financial institution and hope you'll truly believe that you'll need $1,478,950 by age 60 and where else can you accumulate that kind of swag. . . outside of banking with them?)
This Retirement Income Calculator, from Service Canada, thoroughly explains itself along the way, with emphasis on how the Canadian Pension Plan and Old Age Security actually operate.
Another calculator worthy of consideration was created by financial writer Bruce Cohen, sponsored online by Fiscal Agents, an Ontario financial firm. What should you be saving for retirement? may be of particular value for those who wish to factor in a provincial or corporate pension plan.
(If you need to determine your marginal tax rate for any of the above, here it is, the Marginal Tax Rate Calculator.)
Other calculators:
Revenue Canada's site also provides a Child and Family Benefits Online Calculator.
This is of use to those receiving the Canada Child Tax Benefit and the GST refund credit.
As RRSP contributions decrease total income, they often increase social benefits to
be received in the following year.
For instance, consider a single mother with employment income of $45,000, and with two children under 18. For a $1,000 RRSP contribution, she receives a $297 tax refund. Over the course of the following year, she also receives an additional $50 in GST tax credits, and additional $39.96 in CCTB income. Though the marginal tax rate of her contribution is 29.70%, her effective marginal rate becomes 40% -- a benefit equivalent to that given to a single woman with no children and employment income over $100,000.
Articles:
Considerably more opportunities than deferring income taxes arise through the astute use of RRSPs:
estate conservation opportunities, the Home Buyer's Plan,
the Lifelong Learning Plan, strategies to shelter assets vulnerable to student loans,
methods to increase cash flow from social benefits. For a playful and succinct overview, see
The Multifaceted RRSP.
RRSP advantages to young people are seldom touted. Perhaps because the larger financial institutions can't be bothered with smaller accounts needing special care.
See The Christmas Gift RRSP.
RRSP contributions generate income tax refunds -- which can be used to party hardy over spring break in Baja . . . or employed to enhance financial wellbeing.
A "Refund Ragout" illustrates the wealth and wonder of income tax refunds when creatively employed.
There are particular times and specific reasons to contribute more to an RRSP than the limit allowed. "Rolling dough into the future" explains when and why.
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