5 Reasons to Consider Making an RRSP Contribution in 2024 (2024)

FAQs

5 Reasons to Consider Making an RRSP Contribution in 2024? ›

For 2024, the maximum any Canadian can contribute to their RRSP is $31,560 (up from $30,780 in 2023). Below, you will find the contribution limits for each of the past 10 years. Your earned income reported during the previous tax year.

For 2024, the maximum any Canadian can contribute to their RRSP is $31,560 (up from $30,780 in 2023). Below, you will find the contribution limits for each of the past 10 years. Your earned income reported during the previous tax year.

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

Generally speaking, you should aim to contribute at least 10% of your gross income each year to your retirement savings. Start contributing in your early 20s, and that 10% per year could add up to a sizeable savings and a comfortable retirement. Start later in life—say, your late 30s—and 10% a year may not cut it.

Spousal RRSPs come with a three-year attribution rule, which only permits withdrawals three years after the deposit date. So, for example, if you deposit funds into a spousal RRSP on January 1, 2024, your spouse or common-law partner won't be able to withdraw the funds until January 1, 2027.

Contribute early

Procrastination can be costly, so make your RRSP contribution early in the year. The sooner you put your money into an RRSP, the sooner it starts working for you on a tax-deferred basis. If you can't do it all in January, a monthly contribution program is simple and powerful.

There is a sense of future security that comes from maxing out your RRSP every year, regardless of whether you are making money in it or not.

Contribute the maximum to your RRSP

The money you contribute to an RRSP reduces your taxable income. The more you contribute, the more you save on taxes. You should note, however, that everyone has an annual contribution limit – the maximum amount they can invest in an RRSP in any given year.

Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.

Housing—which includes mortgage, rent, property tax, insurance, maintenance and repair costs—is the largest expense for retirees. More specifically, the average retiree household pays an average of $17,472 per year ($1,456 per month) on housing expenses, representing almost 35% of annual expenditures.

What is the TFSA limit for 2024? ›

The annual TFSA dollar limit for 2024 is $7,000. The annual dollar limit is indexed to inflation.

18% of the income you earned in the previous year

The maximum contribution you can make to your RRSP is 18% of your previous year's income or the current fixed contribution limit ($32,490 for 2024).

Think twice about topping up the RRSP

You may be better off foregoing RRSP contributions even though he has RRSP room, and you have funds to contribute. In which case, you can contribute to your TFSAs or leave the funds in your TFSAs or invest in a taxable account.

Up to $10,000 can be withdrawn annually with a maximum lifetime withdrawal of up to $20,000 if you meet the criteria.