top of page

When you shouldn’t contribute to an RRSP


When you shouldn’t contribute to an RRSP

There are a few instances when you may be better off not contributing to your RRSP, and instead putting your money elsewhere. Here are a few examples:

If you have high interest debt

Such as a credit card balance. Paying down that debt should take priority.

If your tax bracket is the same or lower than the tax bracket you’re expecting to be in during retirement.

In that case, your money may be better off saved in a TFSA until you’re in a higher tax bracket.

If you’re in a lower tax bracket now, but expect it to increase in the short-term.

Say you’re expecting a big raise next year, you might want to use a TFSA for the time being.


Who can contribute to an RRSP?

You can contribute to an RRSP if you:

  • Have earned income

  • Have a social insurance number

  • Filed a tax return

  • Have RRSP contribution room available

  • Are under 71. The end of the year that you turn 71 is your last opportunity to contribute.

Figuring out how much to contribute to your RRSP is important. Do it right, and you maximize your tax savings now, while setting yourself up for a good income after retirement. Do it wrong, and you could find yourself paying more taxes than you have to.



bottom of page