Don’t sweat the contribution deadline: Why you should be saving all year

You've probably heard lots about how the pressure is on to make the most of your yearly contribution room for your RRSP. And while it can be tempting to feel the heat, if you’re not able to contribute, all is not lost. Now is also the perfect time to get yourself set-up for success for next year.

The good news is your RRSP isn’t a use it or lose it kind of thing—if you don’t make the contribution deadline, nothing is really going to happen. But that’s also the bad news—you’re potentially missing out on tax benefits and the possible returns that your money could have been earning.

Every year you pay taxes, you accumulate RRSP contribution room. The amount of room you have available to contribute is set by the Canada Revenue Agency, and is typically 18% of your total last year’s income up to a maximum amount (the 2023 maximum is $30,780)—whichever is less. You can find your available contribution room on your Notice of Assessment. For every year you don’t use all of your available contribution room, the amount leftover carries on to subsequent years.

So, while it’s often in your best financial interest to use your available contribution room, the reality is that can be pretty tough when you’re busy trying to live your life, pay your bills, and manage any debt you may have.

Rather than treating March 1 like a do-or-die kind of deadline—because you probably have enough of those in your life already—think of it as a milestone instead. One of the easiest ways to do this is to set up a regular reoccurring contribution to your RRSP. Rather than contributing in one lump sum every year, setting a little bit aside on a weekly, biweekly, or even monthly basis can add up to a lot over a year. By having auto-contributions set-up, the money will automatically transfer from your account into your RRSP every month, which can take a lot of the stress out of saving. Over time, you probably won’t even miss it, especially if you factor it into your regular budget.

No RRSP? No problem. Your local credit union can help you get one set-up—including those automatic contributions—so come next February you’ll have nothing to worry about.