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Planning

Home > Personal Banking > Planning > Retirement Savings

Invest in your future with an RRSP

What is an RRSP?
A registered retirement savings plan (RRSP) is a government-sponsored savings program designed to encourage you to save for your retirement. Incentives include:

tax-deferred growth of your savings (you don’t pay tax until you withdraw the money), and
immediate tax advantages (every dollar you contribute is deducted from your income, so you pay less tax).

A Registered Retirement Savings Plan is a government-approved savings plan, through which you save money for your retirement years. Your contributions, within certain limits, are tax deductible, and the income you earn is tax sheltered.

An RRSP is an investment in your future, with benefits you can enjoy today. By contributing to an RRSP, you can take advantage of substantial tax savings now, and enjoy peace of mind in knowing you’ll have a financially secure retirement. Plus, your RRSP dollars are completely tax sheltered as long as they remain in the fund.

Whether you’re starting your first job, just starting a family, or finally hitting your peak earning years, RRSPs will likely play an important role in your long term financial plan. No matter what stage of life you’re in, Your Neighbourhood Credit Union can help you make the most of your allowable RRSP contributions.

Making your money count
Talk to Your Neighbourhood Credit Union about RRSPs. We’ll help you find a way to fit RRSP contributions into your current financial plan, so you can fully enjoy the tax benefits. We’ll also show you how RRSPs can give you control over your financial future, so that you can enjoy the retirement of your dreams.

The advantage of RRSP loans
You know it’s sometimes important to invest in RRSPs, but sometimes it’s tough to come up with the cash before the deadline for contributions. Your credit union can help with an RRSP loan. We’ll show you how the cost of borrowing can actually be offset by your tax savings at year end.

The convenience of monthly deposits
Maximize your money by depositing your RRSP contribution monthly. The interest earned is compounded, which means you’ll be earning interest on the interest! In the long run, this can have a dramatic effect on your investment. Your Neighbourhood Credit Union can help you benefit from the monthly deposit advantage, by automatically transferring funds from your account to an RRSP. It’s convenient. It’s painless. And it’s as easy as filling in and authorization form at your YNCU branch.

When should I start saving for retirement?
Now. The sooner you start to save, the longer your money has to compound and grow (you earn interest on the amount you contribute, plus interest on the interest).

Here’s an example of how a contribution of $100 a month, earning an average of 8%, can grow over time:

Age when RRSP contributions start	Total Contributed (by age 65)	Value of RRSP (at age 65
25	$48,000	$322,108
35	$36,000	$140,855
45	$24,000	$56,900
55	$12,000	$18,012

A total of $48,000 in contributions (made over a period of 40 years) yielded more than $320,000 — that’s the power of compounding.

Pay down the mortgage, or buy an RRSP?
You can do both. Time is on your side, so the sooner you start saving, the more your investment will grow. Try to maximize your contribution, then use any tax refund you get to pay down your mortgage.

Every situation is different; a YNCU Investment Specialist who understands your needs can help you make the choice that’s right for you.

Who can contribute to an RRSP?
Anyone 18 to 71 years old who earns an employment or self-employed income, or who has unused contribution room.

How much can I contribute?
Look at the Notice of Assessment you received with last year’s income tax statement. The amount you can contribute this year includes any unused contribution room.

Why registered instead of non-registered?
By registering your investment with the government, you do not have to pay tax on interest or capital gains, as you do with non-registered investments (those not in an RRSP). When you do withdraw the money for an income at retirement, your marginal tax rate could be lower, so the amount of tax you pay will be reduced.

When can I contribute?
You can make an RRSP contribution at any time during the year. The contribution deadline for the 2007 taxation year is February 29, 2008.

80% of Canadians still make their contribution in the two weeks before the deadline. You can avoid the stress of trying to find money for your RRSP by starting early and making monthly payments.

Consider the following example, assuming a 6% average annual compounded return:

Pat contributes a lump sum of $1200 at the beginning of each year.
Bob contributes $100 a month.
Marie contributes $1200 at the contribution deadline every year.

After 25 years, each has contributed a total of $30,000 to their RRSP, but Pat’s is worth the most due to compound interest.

What are your options?
At GRCU, you have a choice of investment products to meet your needs and investment style. For details on the following products, simply click on the product name

Ethical Funds®* is the leader in socially responsible investing.
Mutual Funds* are offered from AGF, AIM/Trimark, AIC, Fidelity, Mackenzie, Franklin Templeton and many more.
Index-Linked Term Deposits combine the security of a GIC with the potential for higher return based on the performance of the stock market.
Guaranteed Investment Certificates (GICs) offer a predictable return and security against the possibility of falling interest rates
Variable Rate Deposits ensure that your investment keeps pace with current interest trends.

Mutual Funds are offered through Credential Asset Management Inc. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. ®Credential is a registered mark owned by Credential Financial Inc. and is used under licence. ®Ethical Funds is a registered mark owned by Ethical Funds Inc. and is used under licence. Ethical Funds^® are available to residents of Canada only.

The mathematical table shown is used only to illustrate the effects of the compound growth rate and is not intend to reflect values of the mutual fund or returns on investment in the mutual fund.