A Registered Retirement Savings Plan (RRSP) is a plan registered with the Canadian Revenue Agency that allows Canadian residents to save money on a tax-deferred basis until their retirement. Contributing every year reduces taxable income and can build a larger retirement income for the future.
|2016 annual average Canada Pension Plan||$7,551.96|
|2016 annual maximum Old Age Security*||$6,846.24|
|= Total annual from government sources||$14,398.20|
*Source: Canada.ca. If your individual net income is above $73,756 for 2016, your monthly Old Age Security (OAS) pension payment amount will be reduced to recover the repayment amount owed. If your income is $119,398 or above, your entire OAS pension will be recovered. Calculations are based on October 2015 average benefits paid to individuals at age 65 or older. Note: The amount of your pension will depend on how much and for how long you have contributed to the CPP and on your age when you want your pension to start. If you take it before age 65, your pension will be reduced, by up to 32.4% at age 60. If you take it after 65, your pension may be larger by up to 42% at age 70.
|Marginal tax rate**||32%||39%||46%|
|Actual cost of contribution||$3,400||$3,050||$2,700|
**Source: Canada Revenue Agency. This is a hypothetical example to be used for illustrative purposes only.